Spin and the Bad Math of Austerity Politics

I came across an article in my Saturday morning news scan. In fact, I was so interested, that I sought out other articles on the same subject from different sources and found, even more interesting, that the reporting, writing and analysis of this factual story so widely divergant so as to be confusing and instructive at the same time.

To begin with let's talk about what news reporting is and isn't. I took some journalism course when I was young, didn't do very well in them because I was always 'spinning' the facts (that term wasn't in use at the time even) and putting editorial comment in the body of my articles (ahead of my time).

New is the FACTUAL reporting of an incident. The Who, What, When, Where and How of a story. No speculation is allowed, except in a direct and attributed quote. Period.

That is how I define news. Granted everyone seeing the same situation, having the same factual sources will have a different view of that story but a journalist does their best to be as objective as humanly possible. The analysis and spectualtion is the perview of the reader not the writer.

The article I'm refering to is : Meet the 28-year-old Student Who Exposed Two Harvard Professors Whose Shoddy Research Drove Global Austerity

Alternet has a well know progressive liberal bias but also is known for the credibility of it's authors and work. Links to source material are always provided. The agruments against and weak points are acknowledged and logical fallacies and spin are not encouraged.

From this article:

The world of economics has just changed, and somebody has some 'splaining to do! Please savor the following twisted tale of bad math, academic folly and pundit hubris.

Since 2010, the names of Carmen Reinhart and Kenneth Rogoff have become famous in political and economic circles. These two Harvard economists wrote a paper, “Growth in the Time of Debt” that has been used by everyone from Paul Ryan to Olli Rehn of the European Commission to justify harmful austerity policies. The authors purported to show that once a country's gross debt to GDP ratio crosses the threshold of 90 percent, economic growth slows dramatically. Debt, in other words, seemed very scary and bad.

Their historical data appeared impressive, as did their credentials. Policy-makers and journalists cited the paper to convince the public that instead of focusing on the jobs crisis that was hampering recovery, we should instead focus on deficits. The deficit hawks jumped up and down with excitement.

and in conclusion:

Herndon, Ash, and Pollin have set off a firestorm, with those who long suspected that R&R's work was crap shouting hallelujah and defenders scrambling to figure out a way to support deficit hysteria [6] despite the body blow to their theory.

Bottom line: The foundation of the entire global push for austerity and debt reduction in the last several years has been based on a screwup in an Excel spreadsheet and poorly constructed data.

Reinhart and Rogoff are on the defensive. As Mathew O'Brien at The Atlantic put it, "this is the academic's version of the dream where you're naked in public." They have screwed up royally. They have also done a great deal of damage to the world. As Paul Krugman has observed, their replies to their critics have thus far only compounded the confusion. They need to come clean, stop talking like their mistakes are minor, and own up to the enormity of their errors. And a big round of applause goes to the folks at U Mass Amherst for getting to the bottom of this insanity.

Now the writing style of this piece is pretty bad - too many figures of speech and hyperbole for my taste, the facts are presented in a straight forward and concise manner.

Here are links to the two rearch papers involved:

• Paper that exposes the error:
  
  A World Upside Down? Deficity Fantasies in the Great Recession by Thomas Ferguson and Robert Johnson
  
  
• Original Paper that all the fuss is about:
  
  Growth in a Time of Debt by Carmen Reinhard and Kenneth Rogoff
  
  Note that if you click through to the 'Full-text Article" a pay per view fee is required.
  
  Oh and here's the authors website for marketing their book on the subject:
  
  www.reinhartandrogoff.com...
  
  One wonders about their motivation (speculation).
  

Now I'll present you with two Op/Ed (Opinion/Editorial) pieces to review and discuss.

One from the Right:

www.forbes.com...

One from the Left:

www.nytimes.com...

I think this is a wonderful exercise for anyone interested in improving there powers of discernment and argument. It's helpful to read both sides of an argument (or more sides) before declaiming your absolute truth. Keep an open mind.

I am so tired of guns and bombings and tragedy (the economy is a tragedy)......

Austerity works, it may not be wonderful, but it works.

A simple question to prove that austerity works is this: would you borrow money at an interest rate of 2.5% to 4% in order to possibly make a return of 5% maximum, most likekly 3-4%? Obviously not. So why would borrowing to keep the economy "growing" be a good idea?

Look, on paper a lot of things work, like spending your way out of debt when you're a government. Then again, so do things like perpetual motion machines.

Also, when the government spends money it doesn't have (deficit spending) that is just a tax on you and I. Whether they print or borrow that money, it's just taxation on the value of our money.

Inflation does NOT have to exist. It's become expected that inflation should 2%ish per year, that's sad. All that is, is a tax we pay as a society for not being willing to pay for the programs the government has nor having the stomach to get rid of the excess. It's stupid tax in a sense, rather than disbursing it through the tax system we just all pay 2% across the board every year.

The baseline fallacy with the premise is that government knows more, knows better than the average person.

Government doesn't have money. Government doesn't earn money.

Government prints money.

And government takes money.

Keynesian economics, anyway you put it, is just taking more money from people so government can spend it on more programs.

reply to post by beezzer


Exactly. Keynesian economics has been proven inferior to friedman economics time and time again. Yet one side of the political spectrum can't let go of keynes. One day friedman economics will be proven inferior to some other mode of thought and hopefully we don't get caught up in not changing like we have over the last 40 years.

reply to post by FyreByrd


Two points -

No one here has addressed the actual material that I quoted nor the 'spin' bias of a 'factual' story.