Republicans are Foiled by Math, yet Again! Austerity's Spreadsheet Error.

[Cigar]

The Economic Argument Is Over — Paul Krugman Has Won

For the past five years, a fierce war of words and policies has been fought in America and other economically challenged countries around the world.


Over the course of this debate, evidence has gradually piled up that, however well-intentioned they might be, the "Austerians" were wrong. Japan, for example, has continued to increase its debt-to-GDP ratio well beyond the supposed collapse threshold, and its interest rates have remained stubbornly low. More notably, in Europe, countries that embraced (or were forced to adopt) austerity, like the U.K. and Greece, have endured multiple recessions (and, in the case of Greece, a depression). Moreover, because smaller economies produced less tax revenue, the countries' deficits also remained strikingly high.

So the empirical evidence increasingly favored the Nobel-prize winning Paul Krugman and the other economists and politicians arguing that governments could continue to spend aggressively until economic health was restored.

And then, last week, a startling discovery obliterated one of the key premises upon which the whole austerity movement was based.

An academic paper that found that a ratio of 90%-debt-to-GDP was a threshold above which countries experienced slow or no economic growth was found to contain an arithmetic calculation error.



Read more: http://www.businessinsider.com/paul-krugman-is-right-2013-4#ixzz2RTc1FAE6

Gandhi said, “First they ignore you, then they laugh at you, then they fight you, then you win.” But sometimes, things proceed in the opposite direction. Colbert does Reinhart-Rogoff.


http://www.colbertnation.com/the-colbert-report-videos/425748/april-23-2013/austerity-s-spreadsheet-error?xrs=share_copy

http://cf.ltkcdn.net/boardgames/images/slide/126386-382x500-checkmate-%282%29.jpg

http://blogs.microsoft.co.il/blogs/itaysk/excel_error_thumb_51E18CFC.png

http://origin-www.xactlycorp.com/media/wp-content/uploads/2012/03/Spreadsheet-Errors1.jpg

[Cigar]

http://cdnexpat.files.wordpress.com/2012/04/first-to-apologize.png

[Chris]

Cigar, can you summarize the point succinctly please?

[Cigar]

Cigar, can you summarize the point succinctly please?


“Growth in a Time of Debt” (PDF (http://galileo.stmarys-ca.edu/awilliam/Winter%202012-%20Moraga%20-%20Saturday%20and%20Santa%20Clara%20-%20GMAN%20503/documents/Growth_in_Time_Debt-reinhardandrogoff.pdf)), a 2010 study by Harvard University economists Carmen Reinhart and Kenneth Rogoff, was the rare academic work that had a huge influence on Washington policymakers. It argued that high government debt is associated with slow economic growth and that growth is particularly weak when gross government debt exceeds 90 percent of gross domestic product, a threshold the U.S. had already crossed. With its illustrious authors, wide-ranging analysis, and portentous title echoing Gabriel García Márquez, the paper was praised by everyone from House Budget Chairman Paul Ryan to former Treasury Secretary Timothy Geithner. Alan Simpson and Erskine Bowles called on Reinhart to testify before their deficit reduction commission. Journalists cited the paper as the definitive word on growth and debt, while conservative lawmakers used it to justify cutting spending. Ryan, who ran for vice president last year, cited the work to say the U.S. risked not only slow growth but “a debt-fueled economic crisis.”


Republicans’ reliance on Reinhart-Rogoff to support their budget-cutting agenda was always risky, in part because the authors themselves argued it was important to let the U.S. economy regain speed before embarking on a major deficit reduction program. Now the notion that fighting debt is an urgent priority is further weakened by the authors’ acknowledgment that they made an error in a spreadsheet. Three economists at the University of Massachusetts at Amherst revealed the mistake on April 15.


The Excel mistake is more of a public-relations disaster than a significant slip. Reinhart and Rogoff wrote that average growth in high-debt countries was -0.1 percent. The UMass researchers said it was really 2.2 percent. But the spreadsheet error accounted for only about 0.3 percentage point of that difference. Most of the rest is caused by differences in the way the economists weighted the data. Even the UMass researchers found that higher debt is associated with slower growth.


Deficit hawks seemed unperturbed. “We can debate an exact dollar amount,” Douglas Holtz-Eakin, a former director of the Congressional Budget Office, says in an e-mail, “but the simple fact that debt ultimately hinders growth is unchanged.” Still, liberal skeptics are seizing on this dustup to justify a slower-going approach to deficit-cutting. It’s too soon to judge the political fallout, but this can’t possibly be good for Team Austerity.


:wink: ----> http://www.businessweek.com/articles/2013-04-18/economists-spreadsheet-error-upends-the-debt-debate




http://www.bbc.co.uk/news/magazine-22213219

http://chronicle.com/article/UMass-Graduate-Student-Talks/138763/

http://www.forbes.com/sites/johntamny/2013/04/23/reinhart-and-rogoff-were-wrong-even-without-the-spreadsheet-error/

http://blogs.marketwatch.com/thetell/2013/04/16/the-spreadsheet-error-in-reinhart-and-rogoffs-famous-paper-on-debt-sustainability/

http://video.msnbc.msn.com/all-in-/51653129/#51653129

http://finance.yahoo.com/blogs/the-exchange/did-spreadsheet-error-cost-job-193028078.html

http://www.dailyfinance.com/on/reinhart-rogoff-debt-GDP-spreadsheet-error/


.... and on and on and on and on ... at one point you simply have to stop denying the facts :wink:

[jillian]

Chris, what happened is that the study done by the economists whom the right constantly relied upon in support of austerity measures (not just here, internationally), was found out to be a fail because of a spreadsheet error as well as the intentional exclusion of relevant (contradictory) data.



It’s a factoid trotted out almost any time a serious debate breaks out about the sustainability of debt. Once a country gets past 90% on the public debt-to-GDP ratio, the economy will suffer. (The U.S. ratio was 73% at the end of 2012.)

http://s.wsj.net/public/resources/MWimages/MW-BB533_excel__ME_20130416144502.jpg Roosevelt Institute
That’s a conclusion reached by Carmen Reinhart and Kenneth Rogoff in this landmark 2010 paper (http://www.nber.org/papers/w15639.pdf) , and it’s cited nearly everywhere. Click here for a list of stories on MarketWatch (http://www.marketwatch.com/search?q=Reinhart+and+Rogoff&m=Keyword&rpp=15&mp=0&bd=false&rs=false) including the phrase “Reinhart and Rogoff.”
Except … it might be wrong — in part due to an Excel spreadsheet error. A blog by the Roosevelt Institute (http://www.nextnewdeal.net/researchers-finally-replicated-reinhart-rogoff-and-there-are-some-serious-problems#.UW14rDQo2L4.twitter) details a new research paper critiquing Reinhart and Rogoff. According to the blog, the Excel error excluded Australia, Austria, Belgium, Canada, and Denmark from their analysis, which causes the average GDP, once debt-to-GDP exceeds 90%, to be 0.3 percentage points worse than it should be.


http://blogs.marketwatch.com/thetell/2013/04/16/the-spreadsheet-error-in-reinhart-and-rogoffs-famous-paper-on-debt-sustainability/

[Cigar]

These type of errors are rare in LSD database designs due to column and row redundancy checks

Bad data design not caught due to lack of error checking or little TDD (test driven development)

[Chris]

“Growth in a Time of Debt” (PDF (http://galileo.stmarys-ca.edu/awilliam/Winter%202012-%20Moraga%20-%20Saturday%20and%20Santa%20Clara%20-%20GMAN%20503/documents/Growth_in_Time_Debt-reinhardandrogoff.pdf)), a 2010 study by Harvard University economists Carmen Reinhart and Kenneth Rogoff, was the rare academic work that had a huge influence on Washington policymakers. It argued that high government debt is associated with slow economic growth and that growth is particularly weak when gross government debt exceeds 90 percent of gross domestic product, a threshold the U.S. had already crossed. With its illustrious authors, wide-ranging analysis, and portentous title echoing Gabriel García Márquez, the paper was praised by everyone from House Budget Chairman Paul Ryan to former Treasury Secretary Timothy Geithner. Alan Simpson and Erskine Bowles called on Reinhart to testify before their deficit reduction commission. Journalists cited the paper as the definitive word on growth and debt, while conservative lawmakers used it to justify cutting spending. Ryan, who ran for vice president last year, cited the work to say the U.S. risked not only slow growth but “a debt-fueled economic crisis.”


Republicans’ reliance on Reinhart-Rogoff to support their budget-cutting agenda was always risky, in part because the authors themselves argued it was important to let the U.S. economy regain speed before embarking on a major deficit reduction program. Now the notion that fighting debt is an urgent priority is further weakened by the authors’ acknowledgment that they made an error in a spreadsheet. Three economists at the University of Massachusetts at Amherst revealed the mistake on April 15.


The Excel mistake is more of a public-relations disaster than a significant slip. Reinhart and Rogoff wrote that average growth in high-debt countries was -0.1 percent. The UMass researchers said it was really 2.2 percent. But the spreadsheet error accounted for only about 0.3 percentage point of that difference. Most of the rest is caused by differences in the way the economists weighted the data. Even the UMass researchers found that higher debt is associated with slower growth.


Deficit hawks seemed unperturbed. “We can debate an exact dollar amount,” Douglas Holtz-Eakin, a former director of the Congressional Budget Office, says in an e-mail, “but the simple fact that debt ultimately hinders growth is unchanged.” Still, liberal skeptics are seizing on this dustup to justify a slower-going approach to deficit-cutting. It’s too soon to judge the political fallout, but this can’t possibly be good for Team Austerity.


:wink: ----> http://www.businessweek.com/articles/2013-04-18/economists-spreadsheet-error-upends-the-debt-debate




http://www.bbc.co.uk/news/magazine-22213219

http://chronicle.com/article/UMass-Graduate-Student-Talks/138763/

http://www.forbes.com/sites/johntamny/2013/04/23/reinhart-and-rogoff-were-wrong-even-without-the-spreadsheet-error/

http://blogs.marketwatch.com/thetell/2013/04/16/the-spreadsheet-error-in-reinhart-and-rogoffs-famous-paper-on-debt-sustainability/

http://video.msnbc.msn.com/all-in-/51653129/#51653129

http://finance.yahoo.com/blogs/the-exchange/did-spreadsheet-error-cost-job-193028078.html

http://www.dailyfinance.com/on/reinhart-rogoff-debt-GDP-spreadsheet-error/


.... and on and on and on and on ... at one point you simply have to stop denying the facts :wink:

Summarize in a few words the key points if you will...if you can.

[jillian]

Summarize in a few words the key points if you will...if you can.

i already did that and provided a link.

[Chris]

Chris, what happened is that the study done by the economists whom the right constantly relied upon in support of austerity measures (not just here, internationally), was found out to be a fail because of a spreadsheet error as well as the intentional exclusion of relevant (contradictory) data.





http://blogs.marketwatch.com/thetell/2013/04/16/the-spreadsheet-error-in-reinhart-and-rogoffs-famous-paper-on-debt-sustainability/

"0.3 percentage points worse"

Not significant to the broader argument. But thanks for summary.

[jillian]

"0.3 percentage points worse"

Not significant to the broader argument. But thanks for summary.

actually, it is significant enough to prove the austerity argument is fallacious.

try reading the entire article.

[Chris]

More notably, in Europe, countries that embraced (or were forced to adopt) austerity, like the U.K. and Greece, have endured multiple recessions (and, in the case of Greece, a depression).

That's the broader argument by Krugman and others.

Problem is it's not off by tenths of a percentage, it's utterly wrong. Krugman and others have been arguing this for sometime and been challenged to provide any evidence of austerity on the part of any country. They have failed to produce any because there is none.

Want to try? Find evidence of actual austerity.

[Chris]

actually, it is significant enough to prove the austerity argument is fallacious.

try reading the entire article.

No, it's not. I read the article. What does 0.3% mean, the number is not 90% but 89.7%. 90% was merely a rough estimate, not an exact figure to begin with.

[Cigar]

actually, it is significant enough to prove the austerity argument is fallacious.

try reading the entire article.



BAD DATA is driving BAD policy and BAD business decisions ... these are the things that causes Economic Crashes.

The consequences are exponentially wrong!

... and the Fact that it's Political, no politician will ever admit being Wrong!

[jillian]

BAD DATA is driving BAD policy and BAD business decisions ... these are the things that causes Economic Crashes.

The consequences are exponentially wrong!

... and the Fact that it's Political, no politician will ever admit being Wrong!

i'd hope that's not the case, but we'll see.

[Chris]

BAD DATA is driving BAD policy and BAD business decisions ... these are the things that causes Economic Crashes.

The consequences are exponentially wrong!

... and the Fact that it's Political, no politician will ever admit being Wrong!

The article doesn't say bad data. It says some data was omitted from calculations resulting in a conclusion off by 0.3%.

[Chris]

Here folks is the data on European spending. Can someone find austerity in the data? Spending increased, it did not descrease. There were not spending cuts.

http://i.snag.gy/z2bPC.jpg

[nic34]

Cigar, can you summarize the point succinctly please?

Instead of countries with the dangerous level of 90 percent debt to GDP having a negative growth rate of 0.1 percent, they have a modestly positive growth rate of 2.2 percent. That is a big freaking difference. That's the difference between recession and recovery, which means the intellectual cornerstone for the arguments about austerity coming from the Republican party was based in part upon a screw up on an Excel spreadsheet from two of the most widely lauded economists in the world.

http://video.msnbc.msn.com/all-in-/51653129/#51653129

Blows away the need for austerity theory by the Ryan crowd.

That help?

[Cigar]

Instead of countries with the dangerous level of 90 percent debt to GDP having a negative growth rate of 0.1 percent, they have a modestly positive growth rate of 2.2 percent. That is a big freaking difference. That's the difference between recession and recovery, which means the intellectual cornerstone for the arguments about austerity coming from the Republican party was based in part upon a screw up on an Excel spreadsheet from two of the most widely lauded economists in the world.

http://video.msnbc.msn.com/all-in-/51653129/#51653129

Blows away the need for austerity theory by the Ryan crowd.

That help?


Some people are genetically designed to any facts that are against the Republican Party ... they are per-programed to deny it before ever digesting reality.

[nic34]

.... while denying partisanship....

[Cigar]

The article doesn't say bad data. It says some data was omitted from calculations resulting in a conclusion off by 0.3%.

On your planet, in your world, in your life ... is Omitted Data a Good thing or Bad thing?

When you get Paid ... are you concerned with any Omissions?

[Cigar]

.... while denying partisanship....

http://otherfishlandlocked.files.wordpress.com/2011/09/bam.jpg

[Chris]

Instead of countries with the dangerous level of 90 percent debt to GDP having a negative growth rate of 0.1 percent, they have a modestly positive growth rate of 2.2 percent. That is a big freaking difference. That's the difference between recession and recovery, which means the intellectual cornerstone for the arguments about austerity coming from the Republican party was based in part upon a screw up on an Excel spreadsheet from two of the most widely lauded economists in the world.

http://video.msnbc.msn.com/all-in-/51653129/#51653129

Blows away the need for austerity theory by the Ryan crowd.

That help?

Sure, except here's one minor problem.

Let's say the 0.3% error in conclusion is significant. Let's say it falsifies the Reinhart-Rogoff result. What does that mean? Would it falsify arguments for austerity? No, it does not. In fact it would falsify the opposite. Citing from cigar's "summary":


the authors themselves argued it was important to let the U.S. economy regain speed before embarking on a major deficit reduction program

IOW, based on their conclusion off by 0.3%, Reinhart-Rogoff argued against austerity.

If they are wrong, then the error is an argument in favor of austerity.

[Chris]

Some people are genetically designed to any facts that are against the Republican Party ... they are per-programed to deny it before ever digesting reality.

The Reps are not asking for austerity policies any more then the Dems. Neither party is asking for spending cuts. The only thing both parties ever agreed on was during the fiscla cliff scare, and that was to cut spending rate increases over the next 10 years by from 1 to 2%. That's not austerity.

[Chris]

.... while denying partisanship....

Or is it being blinded by partisanship? The reps blame the dems and the dems blame the reps all the while both engage in unsustainable growth in government, spending and debt.

[Cigar]

The Reps are not asking for austerity policies any more then the Dems. Neither party is asking for spending cuts. The only thing both parties ever agreed on was during the fiscla cliff scare, and that was to cut spending rate increases over the next 10 years by from 1 to 2%. That's not austerity.

So why say NO to that?

Ever asked that question?

[Chris]

On your planet, in your world, in your life ... is Omitted Data a Good thing or Bad thing?

When you get Paid ... are you concerned with any Omissions?

Still not called bad data. It was a bad result, off by 0.3%. If it discredits the general conclusion, it discredits holding off on austerity.

[Chris]

So why say NO to that?

Ever asked that question?

You'd have to ask Obama and the Dems why they reneged on their agreement to first increase taxes and then decreasing the rate of increased spending.

[nic34]

Sure, except here's one minor problem.

Let's say the 0.3% error in conclusion is significant. Let's say it falsifies the Reinhart-Rogoff result. What does that mean? Would it falsify arguments for austerity? No, it does not. In fact it would falsify the opposite. Citing from cigar's "summary":



IOW, based on their conclusion off by 0.3%, Reinhart-Rogoff argued against austerity.

If they are wrong, then the error is an argument in favor of austerity.

HuH?

Off by 2.3%

(negative growth rate of 0.1 percent, they have a modestly positive growth rate of 2.2 percent.)

Try again....

[Chris]

HuH?

Off by 2.3%

(negative growth rate of 0.1 percent, they have a modestly positive growth rate of 2.2 percent.)

Try again....

Hey, argue that with cigar and jillian, they posted 0.3%.

[nic34]

You'd have to ask Obama and the Dems why they reneged on their agreement to first increase taxes and then decreasing the rate of increased spending.

They did.

But the repubs have a mental block.... they think closing tax loop holes on the very rich and large corporations is a tax INCREASE.

Silly people, I know....

[Chris]

They did.

But the repubs have a mental block.... they think closing tax loop holes on the very rich and large corporations is a tax INCREASE.

Silly people, I know....

Yes, in the end, everyone had to agree on reducing the rating of spending increase over the next 10 years.

But that is not cutting spending as both reps and dems mislead.

[Cigar]

Still not called bad data. It was a bad result, off by 0.3%. If it discredits the general conclusion, it discredits holding off on austerity.



I'm a software engineer ... omitting data causes bad results ... bad results caused by bad compilation.

At the end of the day ... you'd have a had time convening your customers that you didn't produced Bad Data when their 787 is in free-fall.

[Chris]

I'm a software engineer ... omitting data causes bad results ... bad results caused by bad compilation.

At the end of the day ... you'd have a had time convening your customers that you didn't produced Bad Data when their 787 is in free-fall.


omitting data causes bad results

That's what I said, bad results, not bad data.

Now if the results are bad then their conclusion to not adopt austerity has been falsified.

[Micketto]

On your planet, in your world, in your life ... is Omitted Data a Good thing or Bad thing?

When you get Paid ... are you concerned with any Omissions?

I realize you just like to argue for the sake of arguing, but there is a big difference between "bad" date and missing data.

When your Dr tests you for cancer... err... sickle cell enemia... an empty 'results' box is quite different from a filled 'results' box.
No matter what the result is.

Or do you prefer it to say "positive" when it's negative.... instead of just being empty?

[Greenridgeman]

That's what I said, bad results, not bad data.

Now if the results are bad then their conclusion to not adopt austerity has been falsified.



And I'm a highly paid French model, and drive a Maserati G-T once owned by Brian Jones.

[Chris]

And I'm a highly paid French model, and drive a Maserati G-T once owned by Brian Jones.


:thinking:

[Micketto]

HuH?

Off by 2.3%

(negative growth rate of 0.1 percent, they have a modestly positive growth rate of 2.2 percent.)

Try again....

You're throwing that in just for the sake of arguing what Chris is saying.... which looks pretty lame.

If you could read... the "Excel" error caused it to be off 0.3%

Try again....

[Cigar]

That's what I said, bad results, not bad data.

Now if the results are bad then their conclusion to not adopt austerity has been falsified.



Question ... Yes or No

Are Human Beings making Policy and Business and Financial decision based on these Bad Results?

No wiggling ... no squirming .. no picking your nose ... just a single ping ... Yes or No

http://ts1.mm.bing.net/th?id=H.4961143446831672&pid=1.7

[Cigar]

You're throwing that in just for the sake of arguing what Chris is saying.... which looks pretty lame.

If you could read... the "Excel" error caused it to be off 0.3%

Try again....



Boy and I glad i don't have you guys doing any financial calculations from me.

[nic34]

You're throwing that in just for the sake of arguing what Chris is saying.... which looks pretty lame.

If you could read... the "Excel" error caused it to be off 0.3%

Try again....

Once again....

A grad student, Thomas Herndan , a 28 year old at University of Massachusetts Amherst , had an assignment, rerun someone else's data and see if you can get the same results. Herndan chose the Reinhart / Rogoff study. He looks at an excel spreadsheet . We've all seen them. And the first thing he sees is the crucial column in their data, the one that averages the growth rates of countries with debt to GDP ratios of 90 percent, is wrong. It's got a mistake. The average should have contained data from rows 30 to 49, but instead only averaged data from 30 to 44. Five missing rows, all because of a typo, apparently. It meant that poor little Belgium , for instance, which had a pretty decent growth even with high debt level, was left out. Not only that, the author selectively omitted a number of countries in the post- World War II era, Canada , Australia and New Zealand , that experienced good growth with high levels of debt. So, here's the punch line, if you correct the spreadsheet error and put the intentionally omitted countries back into the data set , the entire statistic falls apart. Instead of countries with the dangerous level of 90 percent debt to GDP having a negative growth rate of 0.1 percent, they have a modestly positive growth rate of 2.2 percent. That is a big freaking difference. That's the difference between recession and recovery, which means the intellectual cornerstone for the arguments about austerity coming from the Republican party was based in part upon a screw up on an Excel spreadsheet from two of the most widely lauded economists in the world.

http://video.msnbc.msn.com/all-in-/51653129/#51653129

Where is that 0.3%?

[Greenridgeman]

:thinking:



OOPS! I thought I aimed that at the rich guy that talks about his vette and his big SUV.

[nic34]

...and...

So that slightly negative average growth rate for countries with debt-to-GDP ratios was illusory, the product of an Excel error; 2.2 percent is the actual GDP growth rate for countries above the 90 percent mark.

http://www.dailyfinance.com/on/reinhart-rogoff-debt-GDP-spreadsheet-error/

[Chris]

Question ... Yes or No

Are Human Beings making Policy and Business and Financial decision based on these Bad Results?

No wiggling ... no squirming .. no picking your nose ... just a single ping ... Yes or No

http://ts1.mm.bing.net/th?id=H.4961143446831672&pid=1.7

Government always makes bad decisions based on bad results or no results at all.

[Chris]

...and...

So that slightly negative average growth rate for countries with debt-to-GDP ratios was illusory, the product of an Excel error; 2.2 percent is the actual GDP growth rate for countries above the 90 percent mark.

http://www.dailyfinance.com/on/reinhart-rogoff-debt-GDP-spreadsheet-error/



Let's accept your argument. It falsifies the conclusion that we shouldn't take austerity measures. Add the fact that no austerity measures have been taken. Thus the bigger-picture argument by Krugman is bullshit.

[Cigar]

Government always makes bad decisions based on bad results or no results at all.

But Policies that drive Business and The Economy?

[Micketto]

Once again....

A grad student, Thomas Herndan , a 28 year old at University of Massachusetts Amherst , had an assignment, rerun someone else's data and see if you can get the same results. Herndan chose the Reinhart / Rogoff study. He looks at an excel spreadsheet . We've all seen them. And the first thing he sees is the crucial column in their data, the one that averages the growth rates of countries with debt to GDP ratios of 90 percent, is wrong. It's got a mistake. The average should have contained data from rows 30 to 49, but instead only averaged data from 30 to 44. Five missing rows, all because of a typo, apparently. It meant that poor little Belgium , for instance, which had a pretty decent growth even with high debt level, was left out. Not only that, the author selectively omitted a number of countries in the post- World War II era, Canada , Australia and New Zealand , that experienced good growth with high levels of debt. So, here's the punch line, if you correct the spreadsheet error and put the intentionally omitted countries back into the data set , the entire statistic falls apart. Instead of countries with the dangerous level of 90 percent debt to GDP having a negative growth rate of 0.1 percent, they have a modestly positive growth rate of 2.2 percent. That is a big freaking difference. That's the difference between recession and recovery, which means the intellectual cornerstone for the arguments about austerity coming from the Republican party was based in part upon a screw up on an Excel spreadsheet from two of the most widely lauded economists in the world.

http://video.msnbc.msn.com/all-in-/51653129/#51653129

Where is that 0.3%?

Uh... right here.... (posted in this very thread)

The Excel mistake is more of a public-relations disaster than a significant slip. Reinhart and Rogoff wrote that average growth in high-debt countries was -0.1 percent. The UMass researchers said it was really 2.2 percent. But the spreadsheet error accounted for only about 0.3 percentage point of that difference. Most of the rest is caused by differences in the way the economists weighted the data. Even the UMass researchers found that higher debt is associated with slower growth.


http://www.businessweek.com/articles/2013-04-18/economists-spreadsheet-error-upends-the-debt-debate

You're welcome.

Anything else I can pwn you on today ?

[Chris]

But Policies that drive Business and The Economy?

Government policies generally drive business and economy into the ground. Unless the business contracts with government or receives crony capitalistic favors like tax breaks, subsidies, bail outs, etc.

[Cigar]

Government policies generally drive business and economy into the ground. Unless the business contracts with government or receives crony capitalistic favors like tax breaks, subsidies, bail outs, etc.



Ok so now that we know the "information" has been verified and agreed on that it is wrong ... now what?

Keep saying the same thing?

[Chris]

Ok so now that we know the "information" has been verified and agreed on that it is wrong ... now what?

Keep saying the same thing?

If it's right the result was wrong then we throw out the conclusion based on that. Right? The conclusion was do not apply austerity measures. Toss that out. Try austerity, for a change, hopefully.

[Common]

Austerity has failed in europe

[Chris]

Here folks is the data on European spending. Can someone find austerity in the data? Spending increased, it did not descrease. There were not spending cuts.

http://i.snag.gy/z2bPC.jpg

Can you point out the austerity in Europe, common?

[nic34]

Uh... right here.... (posted in this very thread)

The Excel mistake is more of a public-relations disaster than a significant slip. Reinhart and Rogoff wrote that average growth in high-debt countries was -0.1 percent. The UMass researchers said it was really 2.2 percent. But the spreadsheet error accounted for only about 0.3 percentage point of that difference. Most of the rest is caused by differences in the way the economists weighted the data. Even the UMass researchers found that higher debt is associated with slower growth.


http://www.businessweek.com/articles/2013-04-18/economists-spreadsheet-error-upends-the-debt-debate

You're welcome.

Anything else I can pwn you on today ?

You didn't follow the OP links did you?

Ed note:
The following is a guest post from University of Massachusetts grad student Thomas Herndon. Herndon shook the economics world last week by debunking an influential paper from Harvard econ professors Carmen Reinhart and Ken Rogoff that claimed countries with debt to GDP above 90% experience much lower growth.

Herndon's paper showed an Excel coding flaw was partly to blame for the result.
After the paper came out, Reinhart and Rogoff admitted the error, but said that their core point remained valid.

In this post, Herndon responds to their response, and says the core point does not remain sound, and that his work does not show that debt-to-GDP above a certain threshold makes a meaningful impact on growth.

http://www.businessinsider.com/herndon-responds-to-reinhart-rogoff-2013-4#ixzz2RV6Ez5oR
(http://www.businessinsider.com/herndon-responds-to-reinhart-rogoff-2013-4#ixzz2RV6Ez5oR)
Put up your grad degree and try again....

[Cigar]

Uh... right here.... (posted in this very thread)

The Excel mistake is more of a public-relations disaster than a significant slip. Reinhart and Rogoff wrote that average growth in high-debt countries was -0.1 percent. The UMass researchers said it was really 2.2 percent. But the spreadsheet error accounted for only about 0.3 percentage point of that difference. Most of the rest is caused by differences in the way the economists weighted the data. Even the UMass researchers found that higher debt is associated with slower growth.


http://www.businessweek.com/articles/2013-04-18/economists-spreadsheet-error-upends-the-debt-debate

You're welcome.

Anything else I can pwn you on today ?



Oh great ... another Nobel Economics Laureate ... on a Political Forum :rollseyes:

[Micketto]

You didn't follow the OP links did you?


I posted the link that disputes your claim.
The one we all saw posted in this thread.
More than once, now.

http://thepoliticalforums.com/threads/12564-Republicans-are-Foiled-by-Math-yet-Again!-Austerity-s-Spreadsheet-Error?p=275187&viewfull=1#post275187

[Cigar]

I posted the link that disputes your claim.
The one we all saw posted in this thread.
More than once, now.

http://thepoliticalforums.com/threads/12564-Republicans-are-Foiled-by-Math-yet-Again!-Austerity-s-Spreadsheet-Error?p=275187&viewfull=1#post275187



It's not "OUR" claim ... it's Verified Economists Facts.

[Micketto]

It's not "OUR" claim ... it's Verified Economists Facts.

You really want to join him in HIS claim that the error is 2.3% and not the 0.3% that YOU posted ?

Alrighty then !


Those "Verified Economists" didn't even make that claim, but hey... who are we to question you knowing more than them?

ffs

[Chris]

Oh great ... another Nobel Economics Laureate ... on a Political Forum :rollseyes:

We needed one besides you, didn't we?

[Mainecoons]

This has to be one of the dumbest threads ever for here. You're debating a bunch of number-crunching speculation from dueling economists and actually taking it seriously.

In the mean time, Chris shows you quite clearly there hasn't been any austerity and it goes right over your heads.

:rofl:

[zelmo1234]

They did.

But the repubs have a mental block.... they think closing tax loop holes on the very rich and large corporations is a tax INCREASE.

Silly people, I know....

that would be because they would be paying more in taxes!

So IF youriased taxes because you told the republicans that closing loophole would not raise revenue!

Why are you now wanting to close the loopholes! Because you want to raise taxes again?

How is the economy going? And you want to take more money out of it! I think that they are right to say NO!

[zelmo1234]

Austerity has failed in europe

It has yet to be tried! Nobody is cutting spending! they are cutting the increase in spending!

[GrumpyDog]

Obama math best. -16x 1 Trillion/+ 6x 100 Billion = Zero debt

[Cigar]

:grin: Defend to the death :rofl:

[jillian]

Obama math best. -16x 1 Trillion/+ 6x 100 Billion = Zero debt

*yawn*

[zelmo1234]

Obama math best. -16x 1 Trillion/+ 6x 100 Billion = Zero debt


It is not going to matter Grumpy, the Democrats and Libera;s don't care about the debt! Look there has been No austerity in the EU and yet they think that cuts in the increas in spending are actually cuts.

Just like the sequester? it cut the increase in spending, so why are all the controlers being sent home un paid? we did not have to send them home last year, and we had less money then! It is political BS

[Mainecoons]

You can bet that none of the deadwood in FAA's "management" was sent home.

[Ransom]

*yawn*

This debt is yours and your children's, Sleepy Head.

[Greenridgeman]

This debt is yours and your children's, Sleepy Head.


Oh, don't remind them of the debt.

[jillian]

Oh, don't remind them of the debt.

addressing long term debt doesn't require austerity.

and if the right were concerned about debt, perhaps they should have said something when bush was the only leader in recorded history to cut taxes during wartime.

using that as an excuse to advance a rightwing agenda is disingenuous.

it's all about grover's "lets starve government until we can drown it in a bathtub" insanity. and, thank goodness... most people don't believe in that view.

[Greenridgeman]

addressing long term debt doesn't require austerity.

and if the right were concerned about debt, perhaps they should have said something when bush was the only leader in recorded history to cut taxes during wartime.

using that as an excuse to advance a rightwing agenda is disingenuous.

it's all about grover's "lets starve government until we can drown it in a bathtub" insanity. and, thank goodness... most people don't believe in that view.


I railed against the Bush tax cuts then, and now.

They should be eliminated across the board.

I am not pushing any agenda other than I do not want my sons being taxed to the point of poverty to pay for a debt this generation built up.

[Chris]

addressing long term debt doesn't require austerity.

and if the right were concerned about debt, perhaps they should have said something when bush was the only leader in recorded history to cut taxes during wartime.

using that as an excuse to advance a rightwing agenda is disingenuous.

it's all about grover's "lets starve government until we can drown it in a bathtub" insanity. and, thank goodness... most people don't believe in that view.


addressing long term debt doesn't require austerity.

Oh? Why is that?


and if the right were concerned about debt, perhaps they should have said something when bush was the only leader in recorded history to cut taxes during wartime.

I, and others I knew then, like mainecoons, did criticize Bush constantly. Bush spent like a drunken sailor. Obama is more of the same.


using that as an excuse to advance a rightwing agenda is disingenuous.

Let's not poison the well of discussion.


it's all about grover's "lets starve government until we can drown it in a bathtub" insanity. and, thank goodness... most people don't believe in that view.

Did Grover say that? I don't think so. Did you know the idea of starving the beast comes from Kennedy's 1962 decision to cut taxes to give the economy a Keynesian boost.* IOW, it's a Keynesian policy.



* “Starve the Beast”: Origins and Development of a Budgetary Metaphor (http://www.independent.org/pdf/tir/tir_12_01_01_bartlett.pdf) (.pdf)

[nic34]

This debt is yours and your children's, Sleepy Head.

Many of us have mortgages that we won't pay off either. Your point?

[nic34]

I, and others I knew then, like mainecoons, did criticize Bush constantly. Bush spent like a drunken sailor. Obama is more of the same.

Sure you all did. Really, I believe you. :wink:
But every president spends, Reagan spent like a "drunken sailor" on defense. It's all about WHAT YOU BUY. Has Obama started any wars yet? Thank god we don't have McCain.


Did Grover say that? I don't think so.

He has been noted for his widely quoted quip: "I'm not in favor of abolishing the government. I just want to shrink it down to the size where we can drown it in the bathtub."

http://en.wikipedia.org/wiki/Grover_Norquist


Did you know the idea of starving the beast comes from Kennedy's 1962 decision to cut taxes to give the economy a Keynesian boost.*

By all means lets go back to those rates!

On taxes, let's be Kennedy Democrats. Or Eisenhower Republicans. Or Nixon Republicans.

The tax reform passed after Kennedy’s death cut the top marginal tax rate from 90 percent to 70 percent, twice today's top rate of 35 percent. Kennedy explicitly called for a top rate of 65 percent, but added that it should be set at 70 percent if certain deductions weren't phased out at the top of the income scale.

http://www.dailykos.com/story/2011/07/10/992860/-On-taxes-let-s-be-Kennedy-Democrats-Or-Eisenhower-Republicans-Or-Nixon-nbsp-Republicans#

[Greenridgeman]

Sure you all did. Really, I believe you. :wink:
But every president spends, Reagan spent like a "drunken sailor" on defense. It's all about WHAT YOU BUY. Has Obama started any wars yet? Thank god we don't have McCain.


He has been noted for his widely quoted quip: "I'm not in favor of abolishing the government. I just want to shrink it down to the size where we can drown it in the bathtub."

http://en.wikipedia.org/wiki/Grover_Norquist



By all means lets go back to those rates!

On taxes, let's be Kennedy Democrats. Or Eisenhower Republicans. Or Nixon Republicans.

The tax reform passed after Kennedy’s death cut the top marginal tax rate from 90 percent to 70 percent, twice today's top rate of 35 percent. Kennedy explicitly called for a top rate of 65 percent, but added that it should be set at 70 percent if certain deductions weren't phased out at the top of the income scale.

http://www.dailykos.com/story/2011/07/10/992860/-On-taxes-let-s-be-Kennedy-Democrats-Or-Eisenhower-Republicans-Or-Nixon-nbsp-Republicans#





Cut the BS deductions, exemptions, credits, allowances etc, and get down to taxing ALL income, and we could have a tax code with rates from 5 to 25%, and a tax return 90% of Americans could do themselves..

The very fact that many of us have to spend $500 or so to prove we owe no extra taxes is just not right.

[Ransom]

Many of us have mortgages that we won't pay off either. Your point?

You signed a mortgage you have no intention of paying off? Isn't that illegal? Should we report you?

[Chris]

Sure you all did. Really, I believe you. :wink:
But every president spends, Reagan spent like a "drunken sailor" on defense. It's all about WHAT YOU BUY. Has Obama started any wars yet? Thank god we don't have McCain.


He has been noted for his widely quoted quip: "I'm not in favor of abolishing the government. I just want to shrink it down to the size where we can drown it in the bathtub."

http://en.wikipedia.org/wiki/Grover_Norquist



By all means lets go back to those rates!

On taxes, let's be Kennedy Democrats. Or Eisenhower Republicans. Or Nixon Republicans.

The tax reform passed after Kennedy’s death cut the top marginal tax rate from 90 percent to 70 percent, twice today's top rate of 35 percent. Kennedy explicitly called for a top rate of 65 percent, but added that it should be set at 70 percent if certain deductions weren't phased out at the top of the income scale.

http://www.dailykos.com/story/2011/07/10/992860/-On-taxes-let-s-be-Kennedy-Democrats-Or-Eisenhower-Republicans-Or-Nixon-nbsp-Republicans#

Thanks for the correct Grover quote.

Can you be a Kennedy Democrat, a Blue Dog, a conservative? Nixon and Eisenhower weren't fiscally sound Presidents. Nixon would do anything to get elected, which got him "unelected".

[Chris]

Many of us have mortgages that we won't pay off either. Your point?

Interesting that you bitch here about banksters but in reality love and depend on them.

[nic34]

Cut the BS deductions, exemptions, credits, allowances etc, and get down to taxing ALL income, and we could have a tax code with rates from 5 to 25%, and a tax return 90% of Americans could do themselves..

The very fact that many of us have to spend $500 or so to prove we owe no extra taxes is just not right.

You're on the right track. :smiley:

[nic34]

You signed a mortgage you have no intention of paying off? Isn't that illegal? Should we report you?

Don't be obtuse. Few ever pay off mortgages. Most sell and buy other homes. The fact is we have a huge debt when we buy necessities like cars and homes. Debt is not always a bad thing.

[Greenridgeman]

You signed a mortgage you have no intention of paying off? Isn't that illegal? Should we report you?



Millions of others did, why single one out?

People lending the money knew they could not and would not pay, and the people buying the homes on Mickey D minimum wage jobs knew they were not going to pay.

Both parties knew Uncle Sam was going to pay.

Meanwhile, American Idol Nation was glued to the TV.

[nic34]

Interesting that you bitch here about banksters but in reality love and depend on them.

Not love, just necessity.

I use a credit union and quit BofA long ago.

[Greenridgeman]

You're on the right track. :smiley:


I am more on the right track than your preconceived stereotypical prejudices against Southern whites will ever let you admit.

[Greenridgeman]

Not love, just necessity.

I use a credit union and quit BofA long ago.


I have a huge Bank of America credit line.

The biggest mistake I ever made was not using all of it to buy Bank of America stock in March 2009.

It went from $2.59 to almost $20, before settling now around $12.

I had a health issue, and just did not want the stress of taking the gamble and meeting the note at that time.

I am rich in other ways though.

[nic34]

Millions of others did, why single one out?

People lending the money knew they could not and would not pay, and the people buying the homes on Mickey D minimum wage jobs knew they were not going to pay.

Both parties knew Uncle Sam was going to pay.

Meanwhile, American Idol Nation was glued to the TV.

Don't stray, you were doing good.

Yes some folks were getting loans that had no business having them. I had neighbors like that with all the toys too. They are gone, but they were mostly just a few. I know many others that got stung by predatory lenders you saw all the time on Idol TEEVEE. Then the 2008 crash and no job. That is not the homeowner's fault.

Blame the guilty, not the victims.....

[Ransom]

Don't be obtuse. Few ever pay off mortgages. Most sell and buy other homes. The fact is we have a huge debt when we buy necessities like cars and homes. Debt is not always a bad thing.

But most purchase those debt items with every intent to pay them off! Even if and when you sell a home, you pay off the original mortgage, you do understand that? Seems to me you don't believe taking on the debt means you must pay it back....that someone will be by to bail you out if needed.

[Ransom]

Millions of others did, why single one out?

People lending the money knew they could not and would not pay, and the people buying the homes on Mickey D minimum wage jobs knew they were not going to pay.

Both parties knew Uncle Sam was going to pay.

Meanwhile, American Idol Nation was glued to the TV.

Perhaps those lending the money felt compelled to in some manner, perhaps mandates and laws existed preventing the banks from making better loan decisions.

[Ransom]

Don't stray, you were doing good.

Yes some folks were getting loans that had no business having them. I had neighbors like that with all the toys too. They are gone, but they were mostly just a few. I know many others that got stung by predatory lenders you saw all the time on Idol TEEVEE. Then the 2008 crash and no job. That is not the homeowner's fault.

Blame the guilty, not the victims.....

you a victim, nic?

Speaking of being obtuse.

[nic34]

But most purchase those debt items with every intent to pay them off! Even if and when you sell a home, you pay off the original mortgage, you do understand that? Seems to me you don't believe taking on the debt means you must pay it back....that someone will be by to bail you out if needed.

Well then you would be wrong.

You are missing the original point I made. People that buy a home have debt... usually long term 20 - 30 years. We make our monthly payments on time and never miss one. And so has the nation. Got bonds?

[nic34]

you a victim, nic?

Speaking of being obtuse.

When you learn the meaning of the word let me know.

Now get off the computer and go back to class sonny....

[Chris]

Oy vey!

"Blame the guilty, not the victims....."

So, anyway, who are the guilty?

[Micketto]

addressing long term debt doesn't require austerity.

and if the right were concerned about debt, perhaps they should have said something when bush was the only leader in recorded history to cut taxes during wartime.

using that as an excuse to advance a rightwing agenda is disingenuous.

it's all about grover's "lets starve government until we can drown it in a bathtub" insanity. and, thank goodness... most people don't believe in that view.

Yeah.. silly Right wingers... totally ignore how Bush affected the debt.

2490

[Micketto]

Many of us have mortgages that we won't pay off either. Your point?

I think his point may have been how the left doesn't care how much they spend, because they don't really care about paying it back.

Way to support his case. ;)

[Micketto]

Don't be obtuse. Few ever pay off mortgages. Most sell and buy other homes.

And they use that money to pay off their mortgages.

Why are you and Obama so different from "most" ?

[nic34]

http://s3.amazonaws.com/dk-production/images/13886/large/wapo_bush_obama_debt.jpg?1356725677 (http://www.washingtonpost.com/business/economy/adding-to-the-deficit-bush-vs-obama/2012/01/31/gIQAQ0kFgQ_graphic.html)

As the Washington Post explained in January, President Bush added $5.1 trillion in red ink to the national ledger. But while the debt has grown by over $5 trillion during Obama's first term, less than $1 trillion can be attributed to new programs he put in place. The rest is the result of the tax revenue loss from the deep recession which began in December 2007 and the continuation of policies inherited from George W. Bush.

http://www.dailykos.com/story/2012/12/30/1174469/-The-national-debt-Republicans-built-that

[Chris]

Yeah.. silly Right wingers... totally ignore how Bush affected the debt.

2490

Since I just above said "Bush spent like a drunken sailor. Obama is more of the same." then either I'm not silly or not a right winger or not either.

http://i.snag.gy/AgIkF.jpg




Say, Obama in your picture looks like Mussolini.

[Chris]

http://s3.amazonaws.com/dk-production/images/13886/large/wapo_bush_obama_debt.jpg?1356725677 (http://www.washingtonpost.com/business/economy/adding-to-the-deficit-bush-vs-obama/2012/01/31/gIQAQ0kFgQ_graphic.html)

As the Washington Post explained in January, President Bush added $5.1 trillion in red ink to the national ledger. But while the debt has grown by over $5 trillion during Obama's first term, less than $1 trillion can be attributed to new programs he put in place. The rest is the result of the tax revenue loss from the deep recession which began in December 2007 and the continuation of policies inherited from George W. Bush.

http://www.dailykos.com/story/2012/12/30/1174469/-The-national-debt-Republicans-built-that

There are lies, damned lies and statistics.
Mark Twain

I can prove anything by statistics except the truth.
George Canning


A non-partisan view would simply say the government is out of control with spending.

[nic34]

Since I just above said "Bush spent like a drunken sailor. Obama is more of the same." then either I'm not silly or not a right winger or not either.

http://i.snag.gy/AgIkF.jpg




Say, Obama in your picture looks like Mussolini.

“Oh, people can come up with statistics to prove anything. 14% of people know that.”Homer Simpson

[Micketto]

Since I just above said "Bush spent like a drunken sailor. Obama is more of the same." then either I'm not silly or not a right winger or not either.

I was speaking sarcastically while showing that it is Obama who has done the most damage to our debt than all others put together.

[nic34]

And that would be a false statement....

[TheDictator]

And that would be a false statement....

But it really is true.

[Chris]

No, nic is right, Obama has increased the debt more than each previous President but not all combined...at least not yet.

[Cigar]

Debts don't matter when Republicans are in Office.

[zelmo1234]

addressing long term debt doesn't require austerity.

and if the right were concerned about debt, perhaps they should have said something when bush was the only leader in recorded history to cut taxes during wartime.

using that as an excuse to advance a rightwing agenda is disingenuous.

it's all about grover's "lets starve government until we can drown it in a bathtub" insanity. and, thank goodness... most people don't believe in that view.

I was not aware that we paid our bills with tax rate percentages? I thought we paid our bills with money!

So I would be happy to say something about the bush deficites because they were totally uncalled for and should have been reduced dramatically!

I have one Senator that totally agrees with me?

http://www.youtube.com/watch?v=1kuTG19Cu_Q I agree 100%

But as far as the tax cuts, if youcan show me where they reduced rather than increased revenue, I will complain about that too!

But the Tax cuts went into effect in 2002 and look what happened to revenue????

http://www.usgovernmentrevenue.com/downchart_gr.php?year=2000_2010&view=1&expand&units=k&fy=fy11&chart=F0-total&bar=0&stack=1&size=l&title&state=US&color=c&local=s

[zelmo1234]

Debts don't matter when Republicans are in Office.

The same can be said for democrats, unless the guy in the video has a real good reason for changing his mind????

[Cigar]

The same can be said for democrats, unless the guy in the video has a real good reason for changing his mind????

Yea ... cleaning up Bush-Shit!

[TheDictator]

Ya, and the next president will be cleaning up his.

[zelmo1234]

Yea ... cleaning up Bush-Shit!

So when are we going to get back to the same worker participations rates? a rising encome rate for the middle class, return the 40% of wealth that the middle class lost.
get economic growth in the 3% range???

when will we get back to deficites below 500 billion dollars a year?

Where is all this prosperity you are talking about?

[Cigar]

Ya, and the next president will be cleaning up his.

I'm ok with it, because I know it will be a Democratic Cleaning Crew and Administration.

8 years of Bush Shit and 8 years of GOP No = More Bush Shit to clean up

[Cigar]

So when are we going to get back to the same worker participations rates? a rising encome rate for the middle class, return the 40% of wealth that the middle class lost.
get economic growth in the 3% range???

when will we get back to deficites below 500 billion dollars a year?

Where is all this prosperity you are talking about?

Talk to the People who are saying NO

So you're expecting Governing while saying no to Government

[zelmo1234]

Talk to the People who are saying NO

So you're expecting Governing while saying no to Government


They are not in my party!

http://thehill.com/homenews/house/83059-senate-sitting-on-290-house-bills

You can write or call dingy harry!

[Cigar]

They are not in my party!

http://thehill.com/homenews/house/83059-senate-sitting-on-290-house-bills

You can write or call dingy harry!

Ok ... not your party .. but you can bitch :)

[zelmo1234]

Ok ... not your party .. but you can bitch :)

Just stating reality, You have not offered statistics to show any different!

I will admit that GWB had a lot of short comings, He spent way to much money, bailed out the banking sector, went from wars to nation building, did I mention the spending?

You still have rose colored glasses on with the Bamster!

[Chris]

Getting back to topic, here's an interesting take:


The deficit cutters and budget balancers have been routed in the field of economics. All those worries about government debts have been debunked. It turns out Kenneth Rogoff and Carmen Reinhart, the academics who provided the intellectual justification for cutting deficits, actually got their math wrong. Their 2010 paper, which said economic growth slows once debt hits 90% of gross domestic product, involved some spreadsheet errors (as the two have now acknowledged, most recently in an op-ed in today’s New York Times). Everyone on the left, from Paul Krugman to Stephen Colbert, has formed a massive conga line. Da-da-da-da-da-DA, da-da-da-da-DA…

We can now borrow, and print, all the money we need. Gold has collapsed. Happy times are here again …

Or so a lot of people are saying. Turns out, though, there is a lot more to the story. And you’re not hearing that side.

...Reinhart and Rogoff’s paper, in which they argued that economic growth slows once government debt passes 90% of GDP, was mostly based on data for advanced economies from 1946 to 2009. The academics who claim to have debunked them, and who argue high debt levels don’t hinder growth, are relying on the same data.

And the whole enterprise is fundamentally flawed.

You cannot, cannot, cannot deduce universal rules — let alone predict the future — based upon a limited set of data. I am constantly stunned at how many people, especially in this country, think that history (or economics) is like the natural sciences, governed by simple, universal mathematical rules that can be worked out by observation....

<snip several historical examples of unpredictability>

As it happens, I’m a historian by training (see Point No. 1), and so I treat this entire enterprise with monumental skepticism. It’s not clear if high debt levels lead to slower growth, or are the result of slower growth, or that the two have only a loose connection. Some countries grew more slowly, or quickly, for other reasons. Was Japan’s boom from 1950 to 1990 due to its low debt levels, or its hard work and the innovation of companies like Sony, Canon and Nikon? Was Britain’s slow growth after the war due to debt levels, or bad management?

We may never know for certain. In the meantime, common sense may remain a useful tool. I remain skeptical that we can borrow and print money indefinitely with no consequences whatsoever. Call me crazy

@ Why everyone is wrong about austerity (http://www.marketwatch.com/story/why-everyone-is-wrong-about-austerity-2013-04-26?pagenumber=2)

[nic34]

Why Austerity Is a Dangerous Idea

Austerity, the policy of cutting state spending to solve debt and growth problems, sells itself to us through a strange combination of morality and seduction. Its moral claim lies in the love of parsimony over prodigality that characterizes economic thought from Adam Smith onward. In this morality play, saving leads to investment, and investment leads to growth. Spending, in contrast, leads to consumption, and consumption leads to debt, especially when the government is involved. What we see in Greece therefore is simply the most egregious example of a secular trend toward overspending. We must cut to restore ourselves and not become Greece. So the story goes.

Austerity suggests that you can have your cake and eat it too, but only when you cut the cake first. Cuts are seen to be growth enhancing, not growth retarding. They restore that all-important “business confidence” necessary for the economy to function.

There is however a rather big problem with this line of thinking. The first is that for people to save, they need to have income from which to save. So if you are, for example, a state in the euro zone today, and every similar state saves at the same time by cutting spending, the result is the shrinkage of everyone’s economy since they are one another’s trading partners and sources of income. Perversely, their debt goes up, not down, relative to their (shrinking) GDP, which is what has happened to every European country that has undergone an austerity program since 2010. They now have more debt, not less.

http://ideas.time.com/2013/04/18/why-austerity-is-a-dangerous-idea/#ixzz2RbkEhntG

[Chris]

Why Austerity Is a Dangerous Idea

Austerity, the policy of cutting state spending to solve debt and growth problems, sells itself to us through a strange combination of morality and seduction. Its moral claim lies in the love of parsimony over prodigality that characterizes economic thought from Adam Smith onward. In this morality play, saving leads to investment, and investment leads to growth. Spending, in contrast, leads to consumption, and consumption leads to debt, especially when the government is involved. What we see in Greece therefore is simply the most egregious example of a secular trend toward overspending. We must cut to restore ourselves and not become Greece. So the story goes.

Austerity suggests that you can have your cake and eat it too, but only when you cut the cake first. Cuts are seen to be growth enhancing, not growth retarding. They restore that all-important “business confidence” necessary for the economy to function.

There is however a rather big problem with this line of thinking. The first is that for people to save, they need to have income from which to save. So if you are, for example, a state in the euro zone today, and every similar state saves at the same time by cutting spending, the result is the shrinkage of everyone’s economy since they are one another’s trading partners and sources of income. Perversely, their debt goes up, not down, relative to their (shrinking) GDP, which is what has happened to every European country that has undergone an austerity program since 2010. They now have more debt, not less.

http://ideas.time.com/2013/04/18/why-austerity-is-a-dangerous-idea/#ixzz2RbkEhntG


Austerity, the policy of cutting state spending to solve debt and growth problems, sells itself to us through a strange combination of morality and seduction. Its moral claim lies in the love of parsimony over prodigality that characterizes economic thought from Adam Smith onward. In this morality play, saving leads to investment, and investment leads to growth. Spending, in contrast, leads to consumption, and consumption leads to debt, especially when the government is involved. What we see in Greece therefore is simply the most egregious example of a secular trend toward overspending. We must cut to restore ourselves and not become Greece.

Indeed, standard economic theory from Smith to Hayek. It works, not perfect, but it works.


Austerity suggests that you can have your cake and eat it too, but only when you cut the cake first. Cuts are seen to be growth enhancing, not growth retarding.

And the standard Keynesian and, I might add, socialist view of wealth as a fixed pie that can only be divided up and redistributed.

Thus this author has pulled a fast one, he's recast, reframed classical economics to a Keynesian/socialist one, a straw man that's easy to knock down. Thing is, it doesn't knock down classical economics, it hoists its own petard. This will be demonstrated here:


There is however a rather big problem with this line of thinking. The first is that for people to save, they need to have income from which to save.

Therefore, spend!! Ah, but it leads to a self-contradiction: There is however a rather big problem with this line of thinking. The first is that for people to spend, they need to have income from which to spend. To do that you must borrow. Perversely, their debt goes up, not down, relative to their (shrinking) GDP, which is what has happened to every European country that has undergone an austerity program since 2010. They now have more debt, not less.

Keep in mind, there is no evidence whatsoever for the implementation of any austerity program. Instead, governments have been borrowing and spending to get into the mess they've got us.


So if you are, for example, a state in the euro zone today, and every similar state saves at the same time by cutting spending, the result is the shrinkage of everyone’s economy since they are one another’s trading partners and sources of income.

False. One two accounts. It assumes the economy is dependent on government spending, which cut, shrinks. But the economy is not dependent on government. Two, cutting spending means less taxes and thus more money in the hands of people, who can save it, so it is invested.

Back to the wealth is a pie straw man: Wealth is created by people exchanging goods and services, so leaving it in the hands of people leads to wealth generation. It is only by leaving in the hands of government, which does not generate wealth, that wealth becomes a pie to be divided up and rationing it out, mostly through crony capitalism.

[Peter1469]

And is there any real austerity? Or just not spending as much as planned- but still an increase in spending?

[Chris]

And is there any real austerity? Or just not spending as much as planned- but still an increase in spending?

That's exactly all it is, from both parties.

But some prefer doublespeak.

I read I forget where that some consider raising taxes an austerity measure. :thinking: