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Austerity...Poshterity
Posted: Fri May 31, 2013 7:29 pm
by kalm
That's not to say out of control spending isn't a problem, but it appears some conk economic meme's are a bit over-blown.
As you can see from the chart from Dube's paper below, growth tends to be slower in the five years before countries have high debt levels. In the five years after they have high debt levels, there is no noticeable difference in growth at all, certainly not at the 90 percent debt-to-GDP level that Reinhart and Rogoff's 2010 paper made infamous. Kimball and Wang present similar findings in their Quartz piece. (Story continues below chart.)
This contradicts the conclusion of Reinhart and Rogoff's 2010 paper, "Growth in a Time of Debt," which has been used to justify austerity programs around the world. In that paper, and in many other papers, op-ed pieces and congressional testimony over the years, Reinhart And Rogoff have warned that high debt slows down growth, making it a huge problem to be dealt with immediately. The human costs of this error have been enormous.
Even after University of Massachusetts graduate student Thomas Herndon found Reinhart and Rogoff's work included errors and that their 2010 paper was missing important data, the researchers stood by their ultimate conclusion: that growth dropped off significantly after debt hit 90 percent of GDP. They claimed that austerity opponents like Paul Krugman have been so so rude to them for no good reason.
http://www.huffingtonpost.com/2013/05/3 ... r=Business" onclick="window.open(this.href);return false;
Re: Austerity...Poshterity
Posted: Sat Jun 01, 2013 7:44 pm
by GannonFan
This obsession by Keynesian apologists to defend runaway spending is amazing to me, especially with the focus on such minutia as what debt level is worse than another and how one particular study pegged what a really bad number was. It's like a strawman argument to defend the undefensible in the hope that people will focus on that one particular study rather than the overwhelming data. The classic missing the forest for the trees paradox.
In the chart in the article you linked to it's pretty clear that the higher the debt level the lower the growth. And that's the case in the leadup to that date, in the present at that debt, and in the future years after achieving that debt. There's a simple and clear downward sloping line for growth as deficit spending increases.
Whether 90% is some significant milestone or not, the article you cite actually shows that the higher the debt, the slower the growth. That's the forest that you seem to be ignoring by focusing on one tree. Your tunnel vision is quite impressive.
Re: Austerity...Poshterity
Posted: Mon Jun 03, 2013 5:34 pm
by YoUDeeMan
Game. Set. Match.
GannonFan wins in straight sets.
kalm does his best John Macenroe imitation and complains to the ref about a line call.
Re: Austerity...Poshterity
Posted: Mon Jun 03, 2013 5:39 pm
by CID1990
Smack
Sent from the center of the universe.
Re: Austerity...Poshterity
Posted: Mon Jun 03, 2013 6:09 pm
by AZGrizFan
Cluck U wrote:Game. Set. Match.
GannonFan wins in straight sets.
He usually does.
Re: Austerity...Poshterity
Posted: Mon Jun 03, 2013 8:47 pm
by kalm
Cluck U wrote:Game. Set. Match.
GannonFan wins in straight sets.
kalm does his best John Macenroe imitation and complains to the ref about a line call.
Yawn...
I'm not sure what the right level of debt to GDP is during an epic recession in order to maintain civil obedience and climb back out of the hole. I'm guessing neither do economic conks like Ganny. I think both sides of the argument who raise honest points are interesting and should be considered.
What I do know is that not all debt is bad and that one of the main drivers supporting the austerity movement was patently wrong in it's analysis. I'm not sure whether or not Ganny knows this.
Oh...and...
THAT BALL WAS ON THE LINE!!!
Re: Austerity...Poshterity
Posted: Tue Jun 04, 2013 5:45 pm
by JohnStOnge
This obsession by Keynesian apologists to defend runaway spending is amazing to me
Keynes is definitely an example of a "the world would have been better off if he'd never been born" person. In addition to coming up with crappy theory that has caused a lot of damage he was a complete pervert who victimized some unknown but large number of young boys through his homosexual activities.
Re: Austerity...Poshterity
Posted: Tue Jun 04, 2013 7:43 pm
by kalm
JohnStOnge wrote:This obsession by Keynesian apologists to defend runaway spending is amazing to me
Keynes is definitely an example of a "the world would have been better off if he'd never been born" person. In addition to coming up with crappy theory that has caused a lot of damage he was a complete pervert who victimized some unknown but large number of young boys through his homosexual activities.
We've been through this before. Keynes and FDR's ideas spawned many great public works projects that the public and private sector still benefit from today and may never have come to fruition through private sector spending. I hadn't heard that Keynes was a pedophile before. Care to provide some links?