By Philip Pilkington, a writer and research assistant at Kingston University in London. You can follow him on Twitter @pilkingtonphil
Over the past week there has been some fuss over alleged inconsistencies found by the economists Herndon, Pollin and Ash in the famous 2010 Rogoff-Reinhart study on levels of government debt and its effects on growth. It was this study that generated the meme according to which debt-to-GDP levels of over 90% would lead to substantially slower growth. The original study found that countries with a debt-load of 90% or over would experience average growth rates of -0.1% of GDP. When the critics rejigged the numbers a bit and corrected the errors, however, they got an average growth rate of 2.2% of GDP. Needless to say, that this is a substantial difference.
The public debate, however, has mainly focused on an error that the critics found in Reinhart and Rogoff’s Excel data-sheet. This is despite the fact that the error did not account for a great deal of the rather dismal findings of the original authors. So, why the focus? Well, it seems that the media like having economics around to treat as a sort of hard science that can generate yes or no answers – while the media are quick to throw certain figures under the bus if the mood is right; they are not so quick to question the system that their reporting largely relies upon. Even though most educated people treat economics with a healthy degree of scepticism they nevertheless often buy into debates that assume that economics can make purely objective judgments.
What is really interesting about the critique of Reinhart and Rogoff is that it raises the issue of just how contentious these studies are. With a little bit of simple tweaking dramatically different results can be obtained given the same historical data. What this means is that subjective bias – whether conscious or unconscious – is buried within the organisation of the data or the study itself and is given a sort of mask of objectivity. Researchers crunch out numbers that, while they seem objective and concrete, are actually based on any number of woolly and subjective assumptions.
John Maynard Keynes recognised the dangers of the new quantitative methods that were emerging in the economics profession even in his own time. He recognised that these methods gave a veneer of objectivity to highly subjective results. In his critique of econometrics, published in 1937, Keynes recalls an old religious story and compares it to the emerging statistical work in economics:
It will be remembered that the seventy translators of the Septuagint were shut up in seventy separate rooms with the Hebrew text and brought out with them, when they emerged, seventy identical translations. Would the same miracle be vouchsafed if seventy multiple correlators were shut up with the same statistical material? And anyhow, I suppose, if each had a different economist perched on his a priori, that would make a difference to the outcome.
Keynes is, I think, touching on a very deep issue here. The story of the translators of the Septuagint has a very specific motivation: namely, that it demonstrates the Purity and Truth of the Divine Material. The underlying assumption here is that the Septuagint contains a single truth that can be arrived at by every reader independently. This, of course, is at the heart of all religious or divine interpretation: the vagaries of subjectivism melt away and a single objective truth is given to the believer.
Today we attribute this same status to economists that we attributed to priests and interpreters of scripture in the past. These figures are supposed to have access to some sort of objective truth about the state of the economy. This objective truth is arrived at in the same way as the translators of the Septuagint arrive at theirs. The economists peer into the historical statistics and use opaque methods to arrive at some mysterious number that we then all accept as being, not a highly subjective impression formed by finite mortals, but an objective, crystal-clear and, in many ways, divine truth about how we should organise our lives.
This, of course, is precisely what the debate around the Reinhart-Rogoff study has degenerated into. Media commentators are not so much interested in the contentious nature of these studies as much as they are interested in the question as to whether Reinhart and Rogoff have engaged in some sort of mistranslation of their Septuagint. It is not that we should distrust such broad statistical studies generally, but simply that Reinhart and Rogoff are False Prophets – and that we need only await the True Prophets to guide humanity to prosperity.
Ironically, this was not the intention of the critics. In their Financial Times article derived from their critique of the Reinhart-Rogoff study, Robert Pollin and Michael Ash raise the same points as Keynes had in his critique of econometrics – although in order to find it one must know how to look for it. Pollin and Ash write:
But we cannot count on [the results of our own study] being true under all, or even most, circumstances. Are we considering the US demobilisation after the second world war or New Zealand experiencing a severe one-year recession? Our evidence shows that one needs to ask these and similar questions, including whether slow growth was the cause or consequence of higher public debt, before we can draw meaningful conclusions.
Pollin and Ash, being good Post-Keynesian economists who have likely read Keynes’ critiques of econometric and statistical studies, recognise well that simply throwing decades of heterogeneous historical data into a statistical blender and then proclaiming the mush that results as some sort of Grand Truth for the absurdity that it is. They are well aware that when it comes to history context is key; a severe one-year recession in New Zealand in the late-1950s is such a different historical constellation than demobilisation in the US after WWII that to compare them in simple statistical terms is patently absurd.
The irritating thing is that most economists and media commentators will admit this as being true, yet they will continue to engage with such nonsense regardless. After all, it is so much easier to comment on single numbers – however mysteriously arrived at – than it is to discuss complex historical constellations. In this regard not much has changed since the emergence of these statistical methods. At the end of his critique of econometrics Keynes recognised that the author, Professor Tinbergen, would likely admit that Keynes’ criticisms were valid yet carry on engaging in such pseudo-objective nonsense regardless:
I have a feeling that Prof. Tinbergen may agree with much of my comment, but that his reaction will be to engage another ten computors and drown his sorrows in arithmetic.
Keynes compared such statistical manipulation to black magic and alchemy in that he recognised what a powerful influence the idea of objective interpretations of manifestly subjective and context-dependent data could have over the minds of men. Today we would do well to keep this in mind as the dust settles on the Reinhart-Rogoff controversy and the whole edifice of the economic priesthood and its pseudo-scientific methods remain intact.
Yet it is only when this entire edifice is taken apart that we can even begin to consider how we might go about running our economies in any remotely rational way. Until then, there will be other Reinhart-Rogoff style studies; there will be other Excel spreadsheet mistakes; and there will be other misunderstood critics and hackneyed media controversies. Meanwhile unemployed workers rot on the dole queue; insulated academics teach mysticism in the classrooms; and the media proves itself time and again to be reliant on the very system it claims to place checks and balances upon.
62 comments
Comments are closed.
It’s not just the broad Vatican-like edifice of economic theory that needs to breached, it’s also that the papal guards that man its battlements which need to be overcome. As, among the first to question Reinhart and Rogoff (RR) was Alexandru Minea and Antoine Parent. Using up-to-date econometric techniques, in their February 2012 CERDI paper:
‘Is High Public Debt Always Harmful to Economic Growth? Reinhart, Rogoff, and some complex non-linearities’. among the first to question Reinhart and Rogoff (RR).
They brought a rigid analysis to bear on the RR data (using RR’s data sets, though not the spreadsheet) and found it wanting. Recognizing their dilemma (contradicting two of the most austereian-orthodox economists) they, opened their analysis with a deference towards agreement by stating:
“…similarly to RR, average economic growth is lower for countries with debt levels between 90 and 115%, compared to countries with debt levels between 60 and 90%.”
Still, they lacked the courage of their conviction to call it outright fraud when they discovered from the same data that:
“Average economic growth is higher for countries with public debt above 115%, compared to countries with debt levels between 90 and 115%”, and more importantly…. “That average economic growth is not statistically different for the former group compared to countries with debt levels between 60 and 90%.”
Effectively they discovered a debt to GDP doughnut- the hole (at the 90-115% range ) right where RR had stipulated the DGP to debt range and the dangerous tipping point – and an almost certain statistical impossibility.
As such, these brilliant economists provide a perfect example of how, in order not to appear ‘RR’ heterodoxic (a death-knell for their career no doubt) they continued to lean, deferentially, towards couching their findings in such terms as:
“Although one should reasonably refrain from concluding that governments should adopt loose fiscal policies, leading to high public debt levels, to foster economic growth, this latter result provides a new perspective on the “debt intolerance ratio” emphasized by RR.”
Emphasizing that:
“Additional evidence is needed before suggesting policy recommendations regarding growth effects of fiscal policy in such high debt regimes, which may be subject to complex nonlinearities. Similar to RR, we find that a debt-to-GDP ratio over 90% is reducing average economic growth. However, contrary to RR, the contraction ineconomic (sic) growth is much less obvious”.
Unable to close the hole in the econometric donut (‘shortcomings, including (i) the specification of exogenous thresholds in the public debt-to-GDP ratio, (ii) the absence of econometric tests for the relevance of the régimes, and (iii) the presence of brutal transitions in the debt-growth relation around the debt thresholds’), they attempted to apply a technique called the ‘Panel Smooth Threshold Regression (PSTR) method’ (a statistical fudge factor).
Still, despite this statistical deference to orthodoxy (as they call it, “In the spirit of RR”) they still find that:
“… compared to countries with a debt ratio between 60 and 90%, countries with a debt ratio between 90 and 115% experience a decline in their average economic growth rates.” and …
“Although this decline is statistically significant, (we) notice that the economic growth contraction is much less pronounced than acknowledged by RR. In addition, contrary to RR, we find that countries with a public debt ratio above 115% present an average growth rate which is higher compared to the average growth rate of countries with a public debt ratio between 90 and 115%”.
In addition, more importantly: “….the growth rate of countries with a debt ratio above 115% is not found to significantly decline compared to the growth rate of countries with a debt ratio between 60 and 90%”, and “In addition, we even show that raising public debt can even increase economic growth, in a context of high debt levels, namely when the public debt-to-GDP ratio is above a threshold level estimated at around 115%.”
Had these two young economists been less concerned about upsetting the ‘holy economic establishment’ (Reinhart and Rogoff in particular), they might now be holding laurels and instead of bupkis; as their conclusions stated only:
“Consequently, additional evidence is needed before suggesting policy recommendations regarding growth effects of fiscal policy in such high debt regimes, which may be subject to complex nonlinearities“.
Among the first to storm the battlements and question Reinhart and Rogoff’s (RR) results was Antoine Parent and Alexandru Minea. Using modern econometric techniques, in their February 2012 CERDI paper: ‘Is High Public Debt Always Harmful to Economic Growth? Reinhart, Rogoff, and some complex non-linearities’. Among the first to question Reinhart and Rogoff (RR).
They analyzed the RR data (using RR’s data sets, though not the spreadsheet) and found it wanting. Recognizing their dilemma (contradicting two of the most austereian-orthodox economists) they, opened their analysis with deference towards agreement by stating: “…similarly to RR, average economic growth is lower for countries with debt levels between 90 and 115%, compared to countries with debt levels between 60 and 90%.”
Still, they lacked the courage of their conviction to call it outright fraud when they discovered from the same data that: “Average economic growth is higher for countries with public debt above 115%, compared to countries with debt levels between 90 and 115%”, and more importantly…. “That average economic growth is not statistically different for the former group compared to countries with debt levels between 60 and 90%.”
Effectively they discovered a debt to GDP donut- the hole (at the 90-115% range) right where RR had stipulated the DGP to ceiling and ttipping point – and an almost certain statistical impossibility.
As such, these brilliant economists provide a perfect example of how, in order not to appear ‘RR’ heterodoxy (a death-knell for their career no doubt) they continued to lean, deferentially, towards couching their findings in such terms as: “Although one should reasonably refrain from concluding that governments should adopt loose fiscal policies, leading to high public debt levels, to foster economic growth, this latter result provides a new perspective on the “debt intolerance ratio” emphasized by RR.”
Emphasizing that: “Additional evidence is needed before suggesting policy recommendations regarding growth effects of fiscal policy in such high debt regimes, which may be subject to complex nonlinearities. Similar to RR, we find that a debt-to-GDP ratio over 90% is reducing average economic growth. However, contrary to RR, the contraction ineconomic (sic) growth is much less obvious”.
Unable to close the hole in the econometric donut (‘shortcomings, including:
a.) the specification of exogenous thresholds in the public debt-to-GDP ratio,
b.) the absence of econometric tests for the relevance of the régimes, and
c.) the presence of brutal transitions in the debt-growth relation around the debt thresholds’),
they attempted to apply a technique called the ‘Panel Smooth Threshold Regression (PSTR) method’ (a statistical fudge factor). Still, despite this statistical deference to orthodoxy (as they call it, “In the spirit of RR”) they still find that:
“… Compared to countries with a debt ratio between 60 and 90%, countries with a debt ratio between 90 and 115% experience a decline in their average economic growth rates.” And…
“Although this decline is statistically significant, (we) notice that the economic growth contraction is much less pronounced than acknowledged by RR. In addition, contrary to RR, we find that countries with a public debt ratio above 115% present an average growth rate which is higher compared to the average growth rate of countries with a public debt ratio between 90 and 115%”.
In addition, more importantly: “….the growth rate of countries with a debt ratio above 115% is not found to significantly decline compared to the growth rate of countries with a debt ratio between 60 and 90%”, and “In addition, we even show that raising public debt can even increase economic growth, in a context of high debt levels, namely when the public debt-to-GDP ratio is above a threshold level estimated at around 115%.”
Had these two young economists been less concerned about upsetting the ‘holy economic establishment’ (Reinhart and Rogoff in particular), they might now be holding laurels and instead of bupkis; as their conclusions stated only: “Consequently, additional evidence is needed before suggesting policy recommendations regarding growth effects of fiscal policy in such high debt regimes, which may be subject to complex nonlinearities“.
“John Maynard Keynes recognised the dangers of the new quantitative methods that were emerging in the economics profession even in his own time.” Keynes was such a good mathematician that he had the self-confidence to laugh off such silliness. In my own career my experience was that often the least mathematically gifted among my colleagues were those most prone to uncritical number-worship.
This is not to deny that there might be some anal-obsessives who number-worship in spite of having a respectable standard of mathematical skill.
I’ve come to think over the years that much of the seductivenes of mathematics comes from the fact that every mathematical statement, if made correctly, must be true. The problem is that while the mathematical statement is true, the truth of that statement as a reliable description of the real world may be completely lacking.
In other words, it’s very easy for many people to confuse the inherent truth of mathematical statements with mathematics as true statements about reality.
Matematics is provable.
What is slipperly is assumptions about populations and samples, especially unstated and unknown assumptions.
Says the liberal arts major…
My Dad was an economist (among other things) and he always insisted that the quantitative methods he learned at Berkeley were mainly bullshit. And that, in fact, the whole field of economics was over-valued. The focus on economics reflects the bankrupt state of the American intelligentsia.
Corrupt? Arguably. Available to the highest bidder? Frequently.
But I have met few if any bankrupt economists.
dearieme says
“John Maynard Keynes recognised the dangers of the new quantitative methods that were emerging in the economics profession even in his own time.”
Philip Pilkington says:
“This is despite the fact that the error did not account for a great deal of the rather dismal findings of the original authors”.
If two young economists, Antoine Parent and Alexandru Minea had been least concerned about upsetting the “holy see” of the economic establishment’ (Bishops Reinhart and Rogoff in particular), they might now be holding laurels and instead of bupkis. Their February 2012 CERDI paper: ‘Is High Public Debt Always Harmful to Economic Growth? Reinhart, Rogoff, and some complex non-linearities’ analyzed the R&R data (using R&R’s data sets, though not the spreadsheet) and found it wanting.
Recognizing their dilemma (being at odds with two of the most austereian-orthodox economists) they, opened their analysis with deference towards agreement by stating: “…similarly to R&R, average economic growth is lower for countries with debt levels between 90 and 115 %, compared to countries with debt levels between 60 and 90 %.”
But, go on to state that: “Average economic growth is higher for countries with public debt above 115 %, compared to countries with debt levels between 90 and 115 %”, and more importantly “That average economic growth is not statistically different for the former group compared to countries with debt levels between 60 and 90 %.” Effectively they discovered a debt to GDP donut hole at the 90-115 % range, right where R&R had stipulated the debt to GDP tipping point to be – and an almost certain statistical impossibility.
In order not to appear ‘R&R’ “unorthodox” they showed deference: “Although one should reasonably refrain from concluding that governments should adopt loose fiscal policies, leading to high public debt levels, to foster economic growth, this latter result provides a new perspective on the “debt intolerance ratio” emphasized by R&R.”
Further, emphasizing that: “Additional evidence is needed before suggesting policy recommendations regarding growth effects of fiscal policy in such high debt regimes, which may be subject to complex nonlinearities. Similar to R&R, we find that a debt-to-GDP ratio over 90 % is reducing average economic growth. However, contrary to R&R, the contraction in economic (sic) growth is much less obvious”.
Unable to close the hole in the econometric donut (‘shortcomings, including: a.) the specification of exogenous thresholds in the public debt-to-GDP ratio, b.) the absence of econometric tests for the relevance of the régimes, and c.) the presence of brutal transitions in the debt-growth relation around the debt thresholds’), they attempted to apply a technique called the ‘Panel Smooth Threshold Regression (PSTR) method’ (a statistical fudge factor).
Still, despite this statistical deference to orthodoxy (as they call it, “In the spirit of R&R”) they still find that: “… Compared to countries with a debt ratio between 60 and 90 %, countries with a debt ratio between 90 and 115 % experience a decline in their average economic growth rates.” Moreover,
“Although this decline is statistically significant, (we) notice that the economic growth contraction is much less pronounced than acknowledged by R&R. In addition, contrary to R&R, we find that countries with a public debt ratio above 115 % present an average growth rate which is higher compared to the average growth rate of countries with a public debt ratio between 90 and 115 %”.
In addition: “….the growth rate of countries with a debt ratio above 115 % is not found to significantly decline compared to the growth rate of countries with a debt ratio between 60 and 90 %”, and “In addition, we even show that raising public debt can even increase economic growth, in a context of high debt levels, namely when the public debt-to-GDP ratio is above a threshold level estimated at around 115 %.”
Their apprehension is evident in their conclusion: “Consequently, additional evidence is needed before suggesting policy recommendations regarding growth effects of fiscal policy in such high debt regimes, which may be subject to complex nonlinearities“.
“All models are wrong. Some are useful.” Box and Draper
http://en.wikipedia.org/wiki/Response_surface_methodology
I harken to another phenomenon – reliance on experts. Reliance on experts is an underecognized cost of technological society. The underlying assumption in this social model is that all experts are benevolent and their advice useful, which was demonstrably falsified in 2007. Further, because “knowing it all” is impossible, even if desired, a kind of hopelessness allows the consumer to accept, uncritically, things they might be able to understand – like a credit card contract – or to demand contract terms they can understand because experts have cautioned that “that’s how its done.”
Shocked and angered by the duplicitousness of our financial masters, many, myself included, have been seeking to understand the economic and financial landscape we currently live in and have become decidedly less willing to accept the pontifications of experts. I suspect this anti-expert response is also responsible for the level of denial as regards climate change, peak oil, etc. I also think this reaction to technological society is an impediment to MMTers, who argue that “national monetary policy is NOT analogous to balancing your checkbook”, not just because it does not comport with experience, but because reliance on experts has proven to be a fool’s game.
I may be in danger of becoming an intellectual Luddite – rejecting what may be good advice due to fears of being fooled again.
“So, why the focus?”
Sorry to sound paranoid, Philip, but I think much of the focus on Excel can be attributed to:
(1) “Fancy Harvard Profs. Make Simple Spreadhsheet Error” makes a snappier headline than either “Harvard Professors Called Out As Fools” or “Harvard Economics Department Screws Us Again”; or
(2) The question of how and why R&R made such apparently biased weightings and errors of omisssion is pretty toxic, since it raises the question of the second alternative headline above. And few want to take on Harvard faculty for lying.
And from my own academic experience I really doubt Herndon, et al., would attack someone like Rogoff directly, preferring to make the mealy mouthed statement you quoted instead.
What really caught my eye in support of view that R&R cooked their data quite deilberately is noticing that even Paul Krugman, who usually supports Rogoff and is loathe to strongly critisize another academic Olympian, came about as close to calling out their intellectual dishonesty as possible without using that phrase:
I do agree with your points about economics, but just look at how much the press loves the “controvery” over such truly scientific questions as climate change, global warming, peak oil, evolution, and so many other hard science questions.”
Interesting also that priests in ancient times also called for sacrifice. Has anything really changed?
I reread Euripides’s Iphigenia in Aulis recently. It is astonishing how modern it is in the main.
Rene Girard has some interesting things to say about herd behaviour, the human desire to scapegoat/sacrifice. I have never seen society the same way since discovering his work.
For I delight in loyalty rather than sacrifice,
and in the knowledge of God rather than burnt offerings. Hosea 6:6 New American Standard Bible (NASB)
But go and learn what this means: ‘I desire compassion, and not sacrifice,’ for I did not come to call the righteous, but sinners.” Matthew 9:13
But if you had known what this means, ‘I desire compassion, and not a sacrifice,’ you would not have condemned the innocent. Matthew 12:7
“(1) “Fancy Harvard Profs. Make Simple Spreadhsheet Error” makes a snappier headline than either “Harvard Professors Called Out As Fools” or “Harvard Economics Department Screws Us Again”
Not to mention that, by implication, the real text of the headlines would be “Neoclassical Economists Called Out As Fools” or “Neoclassical Economists Screw Us Again.” Heavens, we couldn’t have the holiest of the holy questioned, could we?
“Neoclassical Hacks Caught Red Handed Whitewashing Their Propaganda With A Thin Veneer Of Science”
“Leading Hack Economists Tarred And Feathered In Town Square, Populace Rejoices”
I love Pilkington’s analogy to the old LXX translation myth, but I think there’s an even better biblical story that happens to be found only in the Septuagint and not in the Hebrew bible.
The priests of Bel in “Daniel and Bel” are most like Rogoff and Reinhart. They’re frauds pretending to represent a fake god, and profiting handsomely as a result.
Check out the story here. The Ancient Near East “justice” is harsh, but it is fun to see Daniel expose the crooks.
http://www.nccbuscc.org/bible/daniel/14/#v1
Another point often roundly ignored: GDP itself is a very soft number on which possibilities for manipulation are endless. Suppose a culture shock in which wives began sleeping with one another’s husbands in exchange for money. GDP would skyrocket overnight.
How much economic activity goes uncounted? How much of what is counted results in nothing but pollution, of the airwaves, the shelves, the air itself. Consider consultants’ reports: nonsense exchanged for bushels of money in order to justify preordained executive looting strategies.
Growth seems to be a good deal like cancer. Earth Day seems a good time to bring this up.
Jake:
Excellent points. We are focusimg on the inacuracy of the debt to GDP calculations, while we forget thet GDP itself is very “flexible.”
In addition, why do we focus on public debt, and ignore private debt?
Don Levit
GDP measurement is difficult in the extreme.
It appears, AFAIK, to be artificially inflated by the insertion of middlemen: that is, if there are more “transactions”, it makes it appear that there is more GDP, even if there is the exact same final manufactured product going to the exact same customer.
It’s very hard to eliminate these effects, and they even infect generic “industrial production” measurements.
I’m old-school: I think measurements of milled steel and milled aluminum sold are the best measurement of the industrial economy.
We’re doing kind of poorly at industry right now in the US.
Measurements of grain harvests used to be the best measurement of the agricultural economy, but it’s getting harder with nutrient-depleted soil and substandard (Monsanto) grain.
I’d say we’ve made amazing objective progress in the field — especially in monetary theory — since the days of Keynes.
The Excel spreadsheet error angle on the R-R story has helped catapult what would have been a niche issue for the economics community into the mainstream.
I think this will be used as a major example for many in the mainstream to point to as proof that we shouldn’t hold up economic policies as “economists all agree that …” and that we should be open to criticizing any and all studies in the field.
The biggest shock here was that R-R got away with not providing their data and showing it to be replicated in peer review. That is actually a prerequisite for submission to AER — but somehow they managed to slip by because of their status as top Harvard economists.
As a side note, I’m both extremely elated and envious of Herndon, the PhD student who managed to be the guy responsible for debunking the two twits.
It’s truly a David v. Goliath story for those in the economics field — especially PhD students and low level consultants, that we should all be ready to challenge the elites.
Worth noting is Carmen Reinhart’s history as a chief/VP at Bear Stearns as well as her husband’s deep connections as a fellow to the AEI, right-wing think-tank.
Rogoff I have much more respect for (although Stiglitz really let him have it for his reign at the IMF wrt Argentina and others), but I suspect the poisonous lies within the R-R paper come from Carmen, not from Ken.
I frankly think that Carmen should be investigated deeply for the wrongdoing that has been at work in this study. She is definitely one who has stood to benefit the most from the implications of this study and her background and current connections show that she’s, in my loose opinion, really a corporate shill.
In (probably) a twist of fate, RR 2010 was a paper presented at the annual meeting and published in the May 2010 AER issue. The May issue of the AER, being based on papers and proceedings of the annual meeting, is not peer reviewed in the same way. This didn’t stop most people from assuming that the paper must have been peer reviewed, of course.
“amazing objective progress in the economics field?”
If you laid all the toadying economists end to end they would stretch farther than GDP subdivided in nickels. I think more progress has been made in Creation Science.
The last American economist who told the truth was Veblen. Today economists sample rat droppings and massage the results on computers. When they manage to get results sympathetic to the oligarchy, they publish to the blare of trumpets and hide the data. That is how they obtain tenure, collect consulting fees, build beach houses, trade in mousy wives, dine at the White House, become NYT columnists, etc.
Importantly, economists own work—that people respond to incentives—predicts that they’d whore themselves out to the rich and powerful.
It just means we’re obligated in a democracy to tighten the state’s controls on service in public institutions and maintaining the public interest.
Incentives can be changed through coercion by the state.
The fact that we’ve dropped the gold standard and have embraced fiat currency is one major sign of progress.
On that token, the price stability we’ve had in advanced countries over the past couple decades is noteworthy as an achievement in economic policy.
I would say those two achievements are nothing short of amazing examples of progress in the field, both theoretical and in practice.
As a counterfactual — imagine a world where we’re still on the gold standard, or pegging currencies between one another (okay, the Euro project notwithstanding…) — it would have constrained growth a lot more, made international trade a pain by forcing a balance where there was none, etc.
So forgive me, but comparing the practical progress we’ve made in the 20th century in both theory and practice of economics to “Creation science” is really unfair to those in the field.
I would be more impressed by the relative price stability in my country (the UK) in recent decades if it had been accompanied by full employment. Sadly we have not had that since the 1970s. It is not that difficult to achieve price stability if you are prepared to tolerate mass unemployment.
I grew up in the UK’s economic Golden Age (pre 1973). Life was so much nicer then in many ways. For a start, if you wanted a job you just went out and applied for one.
I don’t remember the pay in the UK’s golden age being very generoous.
I also remember a strong culture shock in my first job when faced with much overtime (48 hours a week unasked for overtime), a very tight deadline, and management behaviour on pay, which led me to rethink everthing I had ever read of heard about “bolsie workers” and unions.
I wonder to this day what was managements’ behaviour that led to the “bolshie workers”.
I think this makes Phillips point much clearer:
http://www.fraserinstitute.org/research-news/display.aspx?id=12933
Wow.
Based on the EC, that looks like quite the prescient report!
I hope the journals, especially in Econ, will start talking seriously about tightening their submission guidelines — or, rather, having oversight to ensure their guidelines are in fact enforced (the AER clearly states that the data has be replicable, since 2004 it’s been a codified requirement).
The take away lesson for the media in all this is to run it by Dean Baker. Dean is the best BS detector in the business. immediately after the initial publication Dean wrote…..
Mr Rogoff and Ms. Reinhart have declined to adhere to standard ethics within the economics profession and have refused to share the data on which they base their conclusion with other researchers.
http://www.cepr.net/index.php/blogs/beat-the-press/not-following-professional-ethics-matters-also
The problem is that academics and media won’t say the word “bulls**t” even when their mouths are full of it.
You can’t talk when your mouth is full. Wm Blake didn’t call them “Satanic Mills” for nothing.
The primary reason an economist releases a major study is to hitch their cart to a political horse, R/R being no exception. One can learn much from how the ‘science’ of economics and its various practitioners rise and fall not based upon the quality of the research, but the ability of the research to carry a political pony to victory.
In a capitalist market for academic ideas, the functional measure of truth is who pays for the “research” and who benefits from its conclusions.
Delusion is the opium of the masses:
The criminal fraud of Harvard Economics Department members Reinhart and Rogoff in their service of the oligarchy should:
1-get them fired; 2-get their sponsors exposed; 3-get all the politicians heads out of their asses and start spending to the recovery!
Thank you Mr. Hernden!
America stop the criminal austerians from destroying the nation and the world.
re: get them fired.
Lol. They’ll be pulling down seven figure salaries as Fellows at a Koch think tank by next year. This paper will continue to get cited for fifty years. And they’ll issue several new papers and a couple books that will also be treated with full credulity by the media and punditocracy, as they embark on a speaking tour at $30k per event.
It will be hard to get them fired. While misfeasance and malfeasance are grounds for removal of tenure, neither can be proved in this case. There isn’t enough evidence to prove malicious intent, and there isn’t *quite* enough evidence to prove gross breach of professional standards (though there’s almost enough).
“The public debate, however, has mainly focused on an error that the critics found in Reinhart and Rogoff’s Excel data-sheet. This is despite the fact that the error did not account for a great deal of the rather dismal findings of the original authors.”
Thank you Philip. I’ve been saying this all week and getting no traction. But, but, but Excel errors. How about fudging your analysis to get the results you want? That seems to be the bigger deal here.
See what I said above re “bulls**t.”
Official discussions and media reporting will no longer call a liar a liar, call a fraud a fraud, or call a hack a hack.
They dance around it, use euphemisisms, or nibble at the edges, but never just come out and say it: this is complete bulls**t.
I don’t know if it is professional courtesy, fear of retribution, careerism, coziness, or what Jesse calls the “credibility trap.”
“There seems to be a worksheet error in one of your cells.” So civil.
How about instead: you didn’t get peer reviewed, you hid your data from everyone, and when you showed us your data, there were a series of incorrect entries and discretionary elections that in every single case served to support your conclusion and to remove contradictions to your conclusion. In other words; this paper is a complete fraud. A fabrication. A lie.
Heck, that’s enough circumstantial evidence to get you arrested for terrorism.
Agree completely. Why did they take such a chance with their own integrity? But clearly this is what they did. They simply fabricated their “research” to fit a conclusion they knew would sell.
“Meanwhile […]the media proves itself time and again to be reliant on the very system it claims to place checks and balances upon.” This sounds so similar to the run up to the Iraq war (benefit of the doubt) or over their heads regulators assigned at Lehman Brothers or relying on a banks models to determine if they’ve complied with capital requirements.
Youmake the mistake of believing this is about “data” and “mathematical errors” …its a political fight, the study has been used to cram “austerity” down the throats of everyone in Europe (except the rich) and to a lesser extent the US. Any attack on the study is u.seful politics, and all the more useful when the data is proveable, obviously cooked. mistake? OH bull s**t
This reminds me of the Calvinist doctrine of election, which holds that everyone is predestined to Heaven or Hell at birth or before (bc God knows everything, OK) and the corollary (totally not supported but claimed, nonetheless) is that success in this world, ie wealth etc, indicats God`s favour. So we`re rich because we`re good because we`re good because we`re rich. QED.
This, predictably, got huge traction among the rich, and Calvin got tons of consulting gigs (see esp Reform in Geneva https://en.wikipedia.org/wiki/John_Calvin).
The rich really like R&R, but they are merely apologists who justify the Great Wealth Transfer. Theyll do fine.
BRW, any word from Harvard on this debacleÉ I thought not…
Defrocking Science
Philip argued that: “The underlying assumption here is that the Septuagint contains a single truth that can be arrived at by every reader independently. This, of course, is at the heart of all religious and divine interpretation.”
What Philip forgot to mention is that this assumption is also at the heart of all scientific interpretation.
Science firmly believes in the objective world around us in which our imagination plays no role. And in addition science believes that this objective world is consistently ordered and it is this order which science seeks to discover.
The basis for these two key beliefs/assumptions in science is the historical development of monotheism which attempted to unite what appeared to be chaos under a more timeless order.
The nature of science itself is based on this religious conception.
And it seems that science would not have been possible without monotheism.
Well said, and the problem with economics is that they not only have been trying to claim that there is a single predictable order to economics, but also that economists have found the key to it.
Perhaps this is why people are so credulous to studies. We are hard-wired to accept that there is a single knowable universal answer to all questions – an idea we get some reinforcement of from self-promoters and the media – and so we are not sufficiently skeptical of deliberate falsification through methods and assumptions, and of unconscious biases and erors of methodology.
As a young accountant, I was surprised to learn that in the real world of financial figures, very little was black and white or cut and dried, and that each presentation included estimates, assumptions and elections that created (or perhaps more generously: dealt with) enough uncertainty which you could drive a truck through.
“There is always an easy solution to every human problem–neat, plausible, and wrong.”
In accounting, the only thing which is cut and dried is the current cash balance. If you’re not deliberately dishonest — Enron was deliberately dishonest — you can extend this to the cash flow statements for previous periods.
Accrual accounting is ENTIRELY guesswork and assumptions.
Yves,
Your wry conclusions: “most economists and media commentators will admit this as being true, yet they will continue to engage with such nonsense regardless….”
Make me smile, since as we, who read what you have written on NC and in your book, know:
1. Truth is slippery (even among the well-intentioned)
2. Power obscures truth (and some are NOT well-intentioned…)
3. People believe what they are told without thinking (…and some are sheep, asleep)
4. There are people who make money off the purveying of counterfactuals. (e.g. economists, media commentators)
So more nonsense by all means, please!
Science is very distinctly not about the one valid interpretation of the reality around us. We try hard to show which interpretations might work and those that cannot and try to find experiments that will demonstrate which are the best interpretations. We have admitted for a very long time we are into structural realism, that theory spins with data, there is no neutral observation language and to a form of modern reliableism in which theory from the small should match with theory from the very large and vice verse (sub-atomic – cosmic).
The problem for a scientist coming to economics and social sciences generally is the lack of anything we would call data and general texts we can take at face value.
We could set 70 people to interpret the same chemistry experiment and get very different answers depending on what they knew of chemistry. In relation to R & R we would point to Rachel Carson’s ‘Silent Spring’ and much since in such as clinical research as to even scientists skewing results to fit the funding money (etc.) – a situation still not fully sorted. If I could commercialize the process by which micro-organisms excrete gold nano-particles when in brine (huge amounts of gold in sea water) I doubt my (UK) government would let me announce this to the world.
My guess is that R & R are scholastic like most of academe and can’t see the wood for the trees. They clearly worked out the main chances of survival and success in prestigious colleges as any scholastic before worked out how to be able to write and say the right things to power – something one can do in a niche sense in a Critical Theory department.
I would take R & R to the real data – kids starving, unemployed suicides and a ripped-off bit of looted Africa. People like them and other ‘tough love’ austerity junkies don’t seem to understand what hey do labeling this kind of data as “negative growth”. People dreaming up solutions that would be Soviet Paradise are as bad.
So maybe their study was seriously flawed.
Does that mean the ratio of debt to GDP is meaningless?
Does that mean the amount of debt is meaningless?
Don Levit
Does that mean the ratio of debt to GDP is meaningless?
-Only when GDP = 0. Why is it they never talk about that?
Does that mean the amount of debt is meaningless?
-The debt has meaning, but the amounts are meaningless. Like Love.
-Professor Smilin’ Samnmy Skew, MA Sociology, BA Art History, CFP, CPA, CP
when I run my model I get debt = 97.2837 and GDP = 39.8. then if put in debt = 12, I get GDP = -56.987. I can make GDP go down and up, just by changing debt in both directions. That looks about right. I’m leaving out Lichtenstiein and Lesotho, if I include them GDP goes to 39.81 and -56.982 or 1.2 depending on the variables.
-Professor Smilin’ Sammy Skew, M.A. Sociology, B.A. Art History, CFP, CPA, LLC
R&R are crooks plain and simple and should be fired and jailed.
Harvard is so chicken shit they won’t do it until they are totally humiliated.
Where are those Harvard alums who feel this shame?
Jail them now!
Facile dancing around the issues and play the weak all opinions are valid or questionable trope. Just another academic on easy time. Next!
What’s up, Please go see mine , I talk about how I’m a Magician
In Winnipeg. Thanks!!!Thank you!
We live in a kleptocracy. Economists are propagandists who give intellectual cover to it. That Reinhart and Rogoff asked the wrong questions, used sloppy methodology and committed egregious errors is unimportant. The power of propaganda comes from dominating the public space by getting its message out first and repeating it as often as possible. Propaganda does not need to be true. Indeed it never is. If it were true, it wouldn’t be propaganda. It only needs to be truthy.
Likewise, it is unimportant that propaganda, such as Reinhart and Rogoff’s, is debunked. Propaganda can be debunked multiple times with very little effect upon it or diminution in the numbers who believe it.
The only thing that can beat propaganda is a more powerful message. And importantly that message doesn’t have to be propaganda. The most powerful messages are those which speak to what is best in us. They exist on a very different plane and address a different part of us. So while pointing out the lies and shortcomings of Reinhart and Rogoff has some value, that alone will change few minds. It is, in fact, a mistake because it accepts the kleptocrats’ terms of debate. You want to change people’s minds, then offer them something worth believing in.
Make Your Las Vegas Stay a Great One!
Have the convenience of staying close to the strip in Las Vegas and the luxury of a mansion stay.
With Corporate Mansions you get the best of both worlds.
Our luxurious mansion homes include private pools, personal chefs,
game rooms, golf package discounts and all the amenities of the good life.
All our homes are clean and maintained by a staff on call 24/7.
With Corporate Mansions customer service is #1!
Take advantage of the luxury with a vacation or business trip stay at a Corporate Mansion.
Enjoy the privacy and service a luxury home has to offer.
Come on, spoil yourself! Our team of beautiful VIP reps will cater to your every need.
And don’t forget the amenities including chauffeur, rental cars and show packages.
Corporate Mansions offers refined services and amenities. The result combines personalized luxury services of a five star hotel with the privacy and intimacy of a luxury home. Our guests can expect the finest products and state of the art technology, including Wifi, housekeeping,, laundry/dry-cleaning service, chauffeured limousines, on call staff, chefs, servers, bartenders, child care specialists and masseuses.
So come join us for your next stay in Las Vegas. Whether it’s a vacation, a convention, a wedding or just to get away from it all, call Corporate Mansions today!
For more information, call (888) 595-1750 or visit the Corporate Mansions website(www.corporatemansions.com.
Hi to every one, the contents existing at this site are genuinely amazing
for people experience, well, keep up the good work fellows.
Hello, I enjoy reading through your post. I wanted to
write a little comment to support you.
Originally would not release the spread sheet? Excel spread sheet errors at this level (could it be they wanted to support their lies)? And the current leaders of the republicans and GOP have been took it hook, line and sinkers! WOW! that will the excuse be for this, their results are still good because of magic? Hey, they love that line.
http://www.colbertnation.com/the-colbert-report-videos/425748/april-23-2013/austerity-s-spreadsheet-error
Originally would not release the spread sheet? Excel spread sheet errors at this level (could it be they wanted to support their lies)? And the current leaders of the republicans and GOP have been took it, hook, line and sinkers! WOW! that will the excuse be for this, their results are still good because of magic? Hey, they love that line.
http://www.colbertnation.com/the-colbert-report-videos/425748/april-23-2013/austerity-s-spreadsheet-error