'Intellectual Bulwark' Of Austerity Economics Collapses Because Of Three Major Errors

from the getting-it-wrong dept

Amongst economists and those who draw on their thinking, the names Reinhart and Rogoff are well known for work published under the title "Growth in a Time of Debt," which sought to establish the relationship between public debt and GDP growth. The key result, that median growth rates for countries with public debt over 90% of GDP are about one percent lower than otherwise, and that the mean growth rate is much lower still, has been cited many times, and invoked frequently to justify austerity economics -- the idea being that if the public debt is not reduced, growth is likely to suffer badly.

Given the economic, political and social importance of that finding, many have tried to reproduce it, but failed. A post by Mike Konczal on The Next New Deal blog explains how three researchers finally succeeded -- with surprising consequences:

In a new paper, "Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff," Thomas Herndon, Michael Ash, and Robert Pollin of the University of Massachusetts, Amherst successfully replicate the results. After trying to replicate the Reinhart-Rogoff results and failing, they reached out to Reinhart and Rogoff and they were willing to share their data spreadsheet. This allowed Herndon et al. to see how how Reinhart and Rogoff's data was constructed.

They find that three main issues stand out. First, Reinhart and Rogoff selectively exclude years of high debt and average growth. Second, they use a debatable method to weight the countries. Third, there also appears to be a coding error that excludes high-debt and average-growth countries. All three bias in favor of their result, and without them you don't get their controversial result.
In his post, Konczal goes on to give a good explanation of just what went wrong. Correcting those three major errors produces the following result:
So what do Herndon-Ash-Pollin conclude? They find "the average real GDP growth rate for countries carrying a public debt-to-GDP ratio of over 90 percent is actually 2.2 percent, not -0.1 percent as [Reinhart-Rogoff claim]." [UPDATE: To clarify, they find 2.2 percent if they include all the years, weigh by number of years, and avoid the Excel error.] Going further into the data, they are unable to find a breakpoint where growth falls quickly and significantly.
That is, not only is there no significant difference between countries whose public debt-to-GDP ratio is over 90%, and those with much lower values, there is apparently no critical number above which growth falls catastrophically. Put another way, from the corrected research, there does not seem to be any reason why the public debt-to-GDP ratio cannot keep on rising while preserving normal levels of growth. That clearly runs entirely contrary to the current dogma that public debt must be reduced at all costs in order to keep growth at a healthy level. As the authors of the new paper conclude (pdf):
RR's [Reinhart and Rogoff's] findings have served as an intellectual bulwark in support of austerity politics. The fact that RR's findings are wrong should therefore lead us to reassess the austerity agenda itself in both Europe and the United States.
That debate about public debt reduction and the need for austerity measures certainly won't stop just because a key justification for the approach has been found to be completely wrong. But it's worth noting that alongside the major political ramifications of this new finding, there is another, rather less contentious, conclusion to be drawn.

The three errors in the original work by Reinhart and Rogoff finally came to light when they allowed other researchers to examine their model and the data they employed in it. It then became clear that the model was flawed, and that not all the relevant data had been included in the calculation. Neither was obvious from the result alone.

This reinforces a point we have made before. Alongside the results of their work, academics also need to release the datasets and any mathematical/computational models that they have used to derive them. Without those additional resources, it is not possible for other researchers to reproduce the results, which may -- as turns out to be the case for Reinhart and Rogoff's famous paper -- contain fundamental errors that completely undermine the conclusions drawn from them.

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    John Fenderson (profile), Apr 17th, 2013 @ 4:26pm

    Reproducibility is fundamental

    In the world of science, if a given result hasn't been reproduced by at least a few independent researchers, that result is (mostly) meaningless.

    Economics should be no different.

     

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      Anonymous Coward, Apr 17th, 2013 @ 4:38pm

      Re: Reproducibility is fundamental

      Ah but economics isn't a science and has no validity whatsoever, no matter how many economists agree or how well they do their sums.

       

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        Anonymous Coward, Apr 17th, 2013 @ 4:45pm

        Re: Re: Reproducibility is fundamental

        Economics is more than math, it has a psychological part to it, that is why is so difficult, the math can be the same but if the environment(psychology) is different the results will be different.

        Everything can be peachy with the numbers and the market overall, if panic sets it can transform a good thing into a nightmare.

         

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          Anonymous Coward, Apr 17th, 2013 @ 4:56pm

          Re: Re: Re: Reproducibility is fundamental

          Psychology also not a science in any meaningful sense.

          It all boils down to it being a thing which you can use to explain why something went right or wrong in the past but with no ability to make any accurate predictions for the future. Might as well leave it to priests and witch doctors, if a 'discipline' can't make reasonably accurate predictions then it isn't worthy of the name, science.

           

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            Anonymous Coward, Apr 17th, 2013 @ 7:39pm

            Re: Re: Re: Re: Reproducibility is fundamental

            Actually psychology is a science and inexact science but one none the less.

            Psychology is not voodoo is not magic is we trying to understand how the brain works and today psychology is a far cry from the 60's or even the 80's.

            You can apply pyshcology to funnel people into certain directions just like crabs in a maze can make logical decisions in that maze without being conscious that they are making calculations.

             

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              Anonymous Coward, Apr 18th, 2013 @ 2:08am

              Re: Re: Re: Re: Re: Reproducibility is fundamental

              NLP? Not sure neoro-linguistic programming in itself is proof of psychology being a science, but it is absolutely a neat trick. NLP is answering what, but not how (where how is what takes science). What is going on in the brain that cause it is still a black box.

              I would contest the methodology of a lot of the older works in psychology. Only in recent years has taco sauce tasting, questionaries and "qualitative" studies been set aside for objective measures like blood values and fMRIs...

              In essence, psychology is becomming a neuroscience which I respect. But the "what happens in the brain is unimportant as long as we can grasp the effects" pseudoscience that still to some extend has a hold on psychology is a real turnoff for most.

               

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        John Fenderson (profile), Apr 18th, 2013 @ 8:56am

        Re: Re: Reproducibility is fundamental

        economics isn't a science


        Of course it is. It's a "soft science", but a science nonetheless.

        has no validity whatsoever


        That's just silly hyperbole. Objectively, economics has a great deal of validity. It can be used to successfully predict behaviors, and to point to improved ways of doing things. Perhaps what you mean is that it's not infallible, which is true.

        But remember, science is not about infallibility or even about coming up with results that can be used practically (that's engineering). Science is about studying things, experimenting, and learning how and why they work as they do in a regimented and well-defined way.

        Economics is absolutely this.

         

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          Anonymous Coward, Apr 18th, 2013 @ 4:49pm

          Re: Re: Re: Reproducibility is fundamental

          No I mean it's ability to predict anything at all is no better than astrology and therefore is not useful as a science.
          Perhaps someday with a lot more groundwork it might become useful, unlike astrology but at this moment it's only "use" is to explain past events but it's complete inability to predict future events based on current conditions and past experience means it is in fact useless.

          No one is talking about infallibility which we don't expect from even our best sciences, just usefulness.

          You are right, science is about exploring and investigating but in general they build on hard won information from prior explorations and investigations that have withstood the test of time, economics doesn't have sufficient quality information to provide enough content for economics to be a worthwhile science. If prices go up you can make more money per unit but people may buy less and if prices go down you may make less per unit but people may buy more is about as far as provable theory goes. All the rest is chaff any and all of which can and will be thrown out and replaced when it next fails to predict something important. Between then and now minor tinkering will be done as it fails to predict smaller less important events.

           

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            John Fenderson (profile), Apr 19th, 2013 @ 8:56am

            Re: Re: Re: Re: Reproducibility is fundamental

            No I mean it's ability to predict anything at all is no better than astrology


            Evidence, please. This not only sounds hyperbolic, it's counter to my subjective observations.

            If prices go up you can make more money per unit but people may buy less and if prices go down you may make less per unit but people may buy more is about as far as provable theory goes.


            It sounds like you may not understand what the economics actually studies or the hypotheses and knowledge base around it.

             

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      anonymouse (profile), Apr 17th, 2013 @ 5:55pm

      Re: Reproducibility is fundamental

      Economics relies on nebulous factors such as confidence, and sense of well-being to be considered truly scientific. Those mercurial pieces of economic foundation will always trump analysis and fact.

       

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      art guerrilla (profile), Apr 18th, 2013 @ 1:10pm

      Re: Reproducibility is fundamental

      1. economics, sociology, psychology (in spite of asimov's foundation), etc, are what used to be called 'soft sciences'... just sayin'...

      2. here is where i trot out my over-used economist jokes:

      A. If you laid all the economists in the world end-to-end, they would never reach a conclusion.

      B. Teach a parrot to say 'supply and demand', and you have an economist.

      3. i find economics as a subject, and economists as 'scientists' suspect for at least ONE major reason: they refuse to engage in what they dismiss as 'externalities'...
      ...and EVERYTHING that is important to you and me is an 'externality'...

      (i realize there are numerous newer generation economists who realize this and address it, but classical economists do not...)

      you only have to look at the prognostications of mainstream economists, etc, to see they are mostly wrong, most of the time... and, the reason that is, is because they are NOT scientists, but ADVOCATES for unrestrained capitalism...
      there's is a job to justify the horrors of capitalist imperialism, NOT to deconstruct and criticize the system which employs them...

      art guerrilla
      aka ann archy
      eof

       

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    Anonymous Coward, Apr 17th, 2013 @ 4:33pm

    Hmm.

    Going further into the data, they are unable to find a breakpoint where growth falls quickly and significantly.

    I haven't read the article, but I'm curious if they found a point where it begins to fall slowly.

     

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      Anonymous Coward, Apr 17th, 2013 @ 4:40pm

      Re: Hmm.

      My fear is that people read this article that says that they found no cliff at 90% and will jump to the conclusion that Glyn makes:

      Put another way, from the corrected research, there does not seem to be any reason why the public debt-to-GDP ratio cannot keep on rising while preserving normal levels of growth.

      Maybe the research says that. The quotes provided don't. Just because they didn't find a cliff in the data, doesn't mean there isn't a place where you are over the top of the hill.

       

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        Anonymous Coward, Apr 18th, 2013 @ 2:19am

        Re: Re: Hmm.

        Pure logic, no science says that the problem with debt is the interests and not just the interests now, but the interests in the somewhat distant future too since you need to refinance the bonds.

        The rest are secondary and higher related problems like budget balancing and trust etc.

         

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    Anonymous Coward, Apr 17th, 2013 @ 4:57pm

    I can't help but feel there is a hidden message in this article.

    "Alongside the results of their work, academics also need to release the datasets and any mathematical/computational models that they have used to derive them."

    Hollywood, show your work.

     

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    Pi, Apr 17th, 2013 @ 5:03pm

    This reinforces a point we have made before. Alongside the results of their work, academics also need to release the datasets and any mathematical/computational models that they have used to derive them.

    I don't get it. Is this supposed to be a controversial point or something?

    The above isn't earth-shattering or surprising. It is how science is done. Preaching results without any supporting evidence? That's not science. It's religion.

     

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    out_of_the_blue, Apr 17th, 2013 @ 5:23pm

    "completely undermine the conclusions drawn"

    DON'T draw ANY conclusions from computer models. They're just lies, even if you control the equations and make up your own numbers, you're just lying to yourself. Too many believe them entirely, more than they believe reality. Computer modeling is wish-craft. -- Besides that you actually have to know the answer in advance to verify the results.

    By the way: what confidence can you have in the Higgs boson when a gadget to allegedly find it isn't available to you because costs billions, and the handful of "scientists" who claim to have found it have a HIGH interest in continuing the gravy train of research funding?

     

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      out_of_the_blue, Apr 17th, 2013 @ 5:27pm

      Re: "completely undermine the conclusions drawn"

      And don't believe "economists": the whole field isn't hard science, it's just OPINION about who should labor and who should live in luxury supported by laborers. Naturally those at the top favor the existing evils.

       

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      Anonymous Coward, Apr 17th, 2013 @ 6:05pm

      Re: "completely undermine the conclusions drawn"

      Is there anything you don't hate?

       

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      Anonymous Coward, Apr 17th, 2013 @ 6:36pm

      Re: "completely undermine the conclusions drawn"

      DON'T draw ANY conclusions from computer models. They're just lies, even if you control the equations and make up your own numbers, you're just lying to yourself. Too many believe them entirely, more than they believe reality. Computer modeling is wish-craft. -- Besides that you actually have to know the answer in advance to verify the results.

      I'm sorry you don't understand math.

      By the way: what confidence can you have in the Higgs boson when a gadget to allegedly find it isn't available to you because costs billions, and the handful of "scientists" who claim to have found it have a HIGH interest in continuing the gravy train of research funding?

      While the scientists who performed these experiments certainly have an interest in continued experimentation, they don't have an interest in the specific results of those experiments. If the Higgs Boson hadn't been verified, it would have been more exciting in many ways because the entire Standard Model would need to be rethought.


      You should confine your rants to anti-corporate screeds, where you'll at least find some sympathy. Certainly that's when you seem the most sane to me. Your positions on other topics veer sharply into lunacy.

       

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      Anonymous Coward, Apr 17th, 2013 @ 7:41pm

      Re: "completely undermine the conclusions drawn"

      blue have you been booted from the big blue?
      Is that why you hate computers so much?

      Computer models are useful, if you can keep check your bias out of it, which you would fail every time I must add.

       

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      JarHead, Apr 17th, 2013 @ 10:27pm

      Re: "completely undermine the conclusions drawn"

      Well, I actually agree with OOTB in this matter, though I won't go as far as saying they're worthless s*#t. They have their values, but only if taken with a grain of salt. Something which have it's fundamental theorem begins with "assume..." (i.e. math) should be taken carefully.

      If we all practice that caution, then there's no need for me, or even OOTB, to use some strong words (sometimes) to describe math, or even science in general. In reality, however, some do take science, especially math, as God (or whatever transcendent entity) given gospel which are infallible, and go as far as making it a systemized believe system (aka religion; no I'm not talking about Scientology). That is dangerous.

       

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    Anonymous Coward, Apr 17th, 2013 @ 5:41pm

    Do Reinhart and Rogoff account for such things as bankers crashing the global economy in order to skim off a bit more profit?

    I didn't think so.

    Austerity measures stink and do not help the torpedoed economy no matter how you dress them up with sweet sounding rhetoric. These bastions of trickle down economics are simply rationalizing the burden foisted upon the most vulnerable in an ill conceived attempt to protect their ill gotten gains. It's sickening.

     

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      Anonymous Coward, Apr 17th, 2013 @ 7:42pm

      Re:

      The alternatives to austerity are inflation or defaulting on your debt. Neither of these are good for the economy.

       

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        varagix, Apr 17th, 2013 @ 8:59pm

        Re: Re:

        Only partially true, I think. A country can't really default on it's debt, at least not in the way we traditionally use the term. It's not like an individual or company who can go bankrupt or anything like that. At best, loaning countries/banks can stop lending to a country, at which point the nation has to turn to internal or political solutions to it's funding problems.

        If a nation can't pay it's debt through taxes, either it inflates its currency through printing in order to 'make' the money necessary (see post WWI Germany for the potential results of that policy). Or it can flex it's political/military muscles and just declare its debt null and void, accepting all the ill will and potential sanctions or even military actions that could or would incur.

         

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        Anonymous Coward, Apr 18th, 2013 @ 2:08am

        Re: Re:

        You say that is if inflation was a bad thing.

         

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          Anonymous Coward, Apr 18th, 2013 @ 5:39am

          Re: Re: Re:

          It's not?

          Inflation is the cruelest form of taxation. - Jimmy Carter

          Inflation is the one form of taxation that can be imposed without legislation. - Milton Friedman.

           

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        Anonymous Coward, Apr 18th, 2013 @ 7:49am

        Re: Re:

        Not in all cases. It has not been in Japan. You are not dealing with the idea of the zero bound. Also raising taxes is not inflationary so your argument is overly simplistic.
        Paul Krugman has columns and papaers on the idea of a zero bound.

         

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        John Fenderson (profile), Apr 18th, 2013 @ 9:01am

        Re: Re:

        I would say that you're suffering from a lack of imagination if you think think those are the only alternatives.

         

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      Anonymous Coward, Apr 17th, 2013 @ 7:53pm

      Re:

      Want to see a preview of what "austerity means".

      Look at how the IMF demanded austerity from developing countries and the effects it had in their economies, it was devastating, they all got poorer and poorer, the ones that actually made it, got rid of the IMF debt and created their own debt that they could control.

      The lesson there was to not trust any international bank system or rely on those because you get screwed every single time.

       

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    Anonymous Coward, Apr 17th, 2013 @ 7:51pm

    Wait. Does this mean economic papers are NOT ordinarily peer-reviewed as to the formulas and models used?

    Then why even bother publishing the paper?

     

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      Anonymous Coward, Apr 18th, 2013 @ 2:20am

      Re:

      It actually goes deeper than poor review models. There's been a serious ideological purge happening in the economics circles since about 1950's or so. What you now witness is just the tail end effects of this.

      Every alternative view to the neoclassical/neoliberal doctrine has been purged or driven to the sidelines from academic economics. Basically, if you want to get published in academical economics, you have to toe the ideological line or face banishment.

      I don't think I need to belabour the point on how counter productive this is to actually having anything resembling the truth come out of that failed system.

       

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        Anonymous Coward, Apr 18th, 2013 @ 6:04am

        Re: Re:

        Is this what is commonly referred to as Trickle Down Theory?

        afaik, the only things that trickle down are the horrible repercussions of said theory in action, oh - and all the hot air from those espousing its greatness.

        One would think that decades of data might prove the theory wrong, but no - some continue to push it like it actually works. Well, I guess it works for them anyway. Yea for short term thinking.

         

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    jimb (profile), Apr 17th, 2013 @ 9:41pm

    Correlation is not causality. Economics abounds in "all other things being equal..." assumptions, and those with a political dogma in mind will set the assumptions and end up wherever they want to. Then set the policy, and when the future doesn't happen as they wish (e.g. "these high deficits will trigger massive inflation...") its always a wrong assumption to blame, and not the underlying theory.

    'Clearly, if we just give all the really wealthy people even more money they will create jobs.' Twenty years on of increasing concentration of wealth, and yet there are chronically less jobs than needed. 'Clearly the wealthy need even more income concentration and wealth disparity, its not been concentrated enough yet.'

     

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    Zakida Paul (profile), Apr 18th, 2013 @ 1:24am

    What I hate is that there is plenty of debate and discussion on how to reduce public and private debt but virtually nothing on why there is so much debt in the first place. We are treating the symptoms and doing nothing about the disease leaving us doomed to repeat this cursed cycle forever.

    Under the current monetary system, with the way money is created, the only way to introduce more money into the economy is to add more debt. This is why, despite public spending cuts, government borrowing is still too high. We need fundamental and radical reform of the banking and monetary systems or things can only get worse.

    We need to remove the power of money creation from the banks and re-nationalise it.

     

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      Anonymous Coward, Apr 18th, 2013 @ 6:16am

      Re:

      Off balance sheet foreign wars
      Gutting of regulations put in place to curb bad decisions
      Bank bailouts
      Sweetheart deals
      Bridges to nowhere

      I think it all boils down to corruption, whether driven by greed or dogma does not seem to matter.

       

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    anonymouse, Apr 18th, 2013 @ 3:49am

    really!!!

    Anyone of us knows that if you do not invest in your business it is not going to grow, the same goes for a country when the government tries to stop investing and somehow expects there to be growth.

    No need for investigating the relation between growth and statistics and using all the statistics they use, they are wrong and the fact that most countries that have used austerity are failing is the only statistic you need to prove that their math is wrong.


    Austerity has cost many many countries huge amounts of jobs and investment and this is why they are failing and need handouts, not because of there lack of taxes or overspending, although i will admit that overspending to a crazy amount is not going to work wonders, it has to be targeted spending to create growth and Zimbabwe shows why.

     

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    Prashanth (profile), Apr 18th, 2013 @ 5:22am

    Shot noise

    I can personally attest to this. Last semester I was in a laboratory class where I had to make a presentation on shot noise and the derivation of the electron charge. The value I calculated was on the correct order of magnitude but was around 50% off. It wasn't until after the presentation (and before our papers were due) that my lab partner noticed that I had read off the wrong number from our linear fit as the electron charge (the right number was only about 10% off by contrast). If he hadn't seen what I had done, things could have turned out worse. If this had been the real world and I was publishing a paper confirming the electron charge, I would have been screwed. The problem in economics seems to be that there are too many vested interests (not necessarily professional economists) who will readily partake in confirmation bias instead of carefully scrutinizing data.

     

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    Anonymous Coward, Apr 18th, 2013 @ 5:49am

    Relieved

    Whew...

    And I thought I was going to have to pay off all of my credit cards.

     

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    Anonymous Coward, Apr 18th, 2013 @ 5:55am

    more than anything else, this shows that 'sharing' is the best way to move forward. sharing allows mistakes to be found and corrected. sharing is good! not sharing is prohibitive and restrictive. it inhibits innovation and stops new discoveries from happening. if only those that keep locking stuff away, threatening and/or suing those that use similar things to theirs to promote the sciences and arts, i wonder how much further advanced the human race would be?

     

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    madasahatter (profile), Apr 18th, 2013 @ 8:18am

    Economics is not science

    Science relies on the falsification and testing of hypotheses based on observations. The Higgs Boson existence is a prediction of one model of subatomic particles. If it is proven to exist or if the model is invalidated by new observations then a new or heavily revised model must be developed. The problem with economics is that "testing" economic "theories" involves potentially destroying national (at a minimum) economies and attendant social costs.

    Economists fool themselves by the fact they have unverified mathematical models which look impressive but are "garbage-in, garbage-out".

    History indicates that no country can not continue indefinitely to have spending deficits without severe economic consequences occurring. The exact policy decisions and circumstances will determine the precise consequences. The problem is determining how and when these consequences will occur. I am not making a true scientific argument but one based on seeing similar patterns occur throughout history and noting the eventual results.

    If the dismal science were a true science it would predict the consequences of policies with a high degree of mathematical precision.

     

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    Anonymous Coward, Apr 18th, 2013 @ 8:39am

    HIGH PUBLIC DEBT, HIGH GROWTH: The people are gettign poorer, the elite rivch, getting richer.
    Yup, that's capitalism working its magic for ya.

     

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    NoGodsOrKings, Apr 18th, 2013 @ 10:16pm

    From Techdirt: "... there [is] no significant difference between countries whose public debt-to-GDP ratio is over 90%, and those with much lower values."

    No. That is not the conclusion of the new paper. What the new paper actually says is that, although higher debt-to-GDP ratios do coincide with lower growth rates, the effect may be smaller than previously thought, and without the 'threshold' effect the erring economists had argued for.

    The thrust of the Techdirt article is completely unsupported by the actual numbers.

     

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    special-interesting (profile), Apr 19th, 2013 @ 2:18am

    This is more of my reasons that GDP and Debt load are not really related.

    Some might comment on math but math in itself is a variable as it depends on how its applied. Its not how one calculates what a nation has done but what they have done. Since Washington seems to take Hollywood accounting practices to heart its hard to even use their numbers/analysis. More simply put; Where does a nation place its investment?

    Economic math goes both ways. When ignoring any significant factors it always proves the limited claims. (argue with me) What is significant is the source of the analysis. Special interest industry group analysis should be mostly ignored for obvious reasons.

    GDP is sometimes labeled a measure of Standard of Living which is a gross misunderstanding or misuse of words. Since it is not by any reason a measure of where investments/spending are placed it really tells us nothing. Its only a measure of spending.

    GDP = C + I + G + (X-M) = private consumption + gross investment + government spending + (exports - imports)

    Note that Debt is not included in GDP. Just spending. It does not even suggest where government gets it spending money. Taxes are ignored also. The investment portion only includes capitol equipment so don't confuse it with loans or such.

    Debt is a measure of investment. Profit is a measure of successful investment. Incurring debt is a winning strategy only when the investment pays off.

    What do you think is profitable? A sock? A bond? Gold? US dollars? Euro? Japan yen? Bitcoins? Whatever? Place your bet. Many an investor have won or lost regardless of whether they have a seat on the sock exchange. For many a looser there is a winner.

    For an example of a good national investment:

    At one time the United States invested in the questionable return of the Moon Landing goal by way of NASA. A GREAT Investment. (capitalized for the reason its impossible to criticize success amidst impossible odds.) NASA (for the moon landing) is an exception. Please use this as an example of greatness. (Can anyone do better than this, consider it a challenge!)

    The Panama Canal was a good investment. The Hoover Dam was a good investment. The interstate highway system was a good investment. The WWW was a great investment.

    What constituents a bad investment:

    The stimulus plan of Bush jr to just give our cash was an investment in available spending amounts for the individual. There was no specific investment. No bridge or highway (to nowhere?) that the public might use. It had only one thing going for it; nobody would refuse money being sent to them.

    The drug war is a good example of a bad investment. It benefits no one. Creates armed gangs in every city. Destroys the lives of every arrestee for mere possession/use. It decreases GDP by removing productive normal citizens from the economy. (prison) It increases government expenses through incarceration. (prison expenses ironically increases GDP so its not by any means a real measure of standard of living) Needlessly increases the risk to law enforcement personnel. Decreases the trust in law enforcement in general. Any time anyone said “its for your own good” during a drug arrest its just a flat our lie. Jail NEVER helps ANYONE.

    Criminalization of copyright is a bad investment that will decrease GDP by ruining lives with jail and excessive fines. (That will reduce available spending cash thus standard of living.)

    Save the jail cells for bankers who falsified loan documents just to foreclose on homes.

    When a nation is concerned, its best to provide investment that involves its own people. The citizens are central to successful achievements which will (sometimes) provide profit. Innovation? Technology? All come from citizens (even if they do it at work) and without willing development of new ideas we have nothing. Investment is not always in the form of a loan.

    Heathcare, under such light, would be a vast improvement over wasting money on bank executive bonuses. Longer healthier more productive lives is an investment that does have some profitable return measured positively in GDP.

    How does a nation invest in its people? Libraries are good but reducing or replacing copyright might provide more access than a ten thousand libraries. Investment is not only in cash but often in freedoms and rights for its citizens.

    Its ALWAYAS a question of where to place investment! ALWAYS! On any level.

    For a government; Faith is not a religious statement. Its an investment of the greatness that can be achieved through believing in its own citizens.

    Austerity is an illusion (almost, as wasting cash is always dumb. Remember the NASA profit example.); Where a nation places its monetary investment is of the utmost importance!

    Place your bet. The roulette table spins as we speak... (no clue).

    What is important: A mature culturally advanced (we share information in various formats) society that invests in itself. Prodigious development of technology/innovation is a feature of such an advanced culture. Grow with it. Or perish. As all civilizations do when they become irrelevant.

     

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