Skip to main content

View Diary: Reply to Reinhart and Rogoff’s NYT Response to Critics (38 comments)

Comment Preferences

  •  I think the bigger picture is being ignored (1+ / 0-)
    Recommended by:
    ek hornbeck

    Deficit spending is sometimes a necessary thing, but it wasn't a good thing when Reagan did it, and it isn't a good thing now.

     All this talk about austerity vs. stimulus spending distracts us from the fact that an entire world of progressive economic reforms are being ignored.
      I started to list a few here and here.

    ¡Cállate o despertarás la izquierda! - protest sign in Spain

    by gjohnsit on Sat Apr 27, 2013 at 05:51:57 AM PDT

    •  Too broad (3+ / 0-)

      to just say it's not a good thing.  It was a good thing when FDR did it to pull this country out of a Depression.  When it's done to wage global war or enrich the 1%, it's not a good thing. When it's done to improve the overall economy for everyone, especially when WPA-like programs are the vehicle and infrastructure that benefits the country for nearly a century results.


      "Justice is a commodity"

      by joanneleon on Sat Apr 27, 2013 at 06:07:00 AM PDT

      [ Parent ]

      •  I stick by my statement (1+ / 0-)
        Recommended by:
        ek hornbeck
         It was a good thing when FDR did it to pull this country out of a Depression.
        When FDR did it, it was a necessary thing (just like it is a necessary thing now). That doesn't make it good.

          Historically bankers (and the 1%) love government deficit spending. That's why they have encouraged useless wars for hundreds of years. Because they make lots and lots of money on government borrowing.
          Make no mistake, that borrowing is a transfer of wealth to the 1%.

          But that still avoid my bigger point: all this debate over austerity vs. stimulus spending distracts us from the fact that real economic reform isn't happening.
          Stimulus spending will not fix the economy. Real reforms must also happen for this economy to recover.

          Right now the entire spectrum of economic debate ranges from propping up the status quo to enhancing the status quo. That's all this debate is doing.

        ¡Cállate o despertarás la izquierda! - protest sign in Spain

        by gjohnsit on Sat Apr 27, 2013 at 06:22:18 AM PDT

        [ Parent ]

        •  It's necessary now too (2+ / 0-)
          Recommended by:
          ek hornbeck, gjohnsit

          It is necessary now too. But it's  very true that it has to be the right kind of deficit spending in the economic context of a particular nation.

          That's why MMT doesn't say that deficits are always and everywhere good, or always and everywhere lead to growth Details are important and econometric studies have to be very carefully and comprehensively designed to assess alternative causal models. RR didn't do that.

          At the NEP site, a commenter raised the issue of why MMT economists hadn't replicated the study since it seemed so easy to do. I replied there in this way.

          John, I suspect that the type of study you’re proposing is in the works now that the data’s been released. Remember, that UMKC people did try to acquire the RR data to replicate their work back in 2010, but RR refused to distribute their spreadsheet and have continued to refuse to disclose it until a few weeks ago. Of course, an attempt could have been made to gather the data again, but then the situation would have been a he said, she said deal with the name of Harvard and the money of the austerians in back of R and R, so that kind of refutation would have received little attention.

          MMT economists were very active in criticizing the RR study in 2010 and since on design and theoretical grounds. Those criticisms were decisive. The simple point that RR didn’t distinguish between fiat sovereign nations and, more generally among nations based on their type of currency system was enough to convince me that the study was BS. When people continued to take it seriously after critiques from Randy and Yeva Nersisyan and also Bill Mitchell appeared told me in 2010, that the mainstream didn’t care about the validity and would not listen to obvious critiques.

          It was also plain to me that the study was junk economic science because it included so few variables. That is, if you’re basically producing two variable correlations over all nations you can’t be interested in really explaining economic growth while highlighting the role of debt levels in that process. The reason why is that you’re not including the variety of variables and measures you need to partial out spurious correlations. For example, if you’re looking at economic growth as the dependent variable, then many other factors can impact that such as levels of unemployment, educational quality, levels of private investment, the proportion of an economy occupied by the FIRE sector, attributes of the health care system, price stability, crime rates, cultural factors, etc. You also need to investigate reverse causation and mutual causation, and of course do that across differing currency regimes.

          I can go on and on, but my point here is that, based on its design, and failure to include data that would test alternative theories and explanations of gowth, it was evident to me, and should have been evident to the econometricians working for the world’s major institutions that the R-R reported results, even without calculation errors, or leaving out relevant data points, could not say possibly say anything about causal relations that would be useful in arriving at policy recommendations. It was empty of policy relevance unless people wanted to believe in austerity. It was, in other words, a pure “junk science” fig leaf for the oligarchs to prosecute their war against everyone else.

          The press and MSM media played along with the fig leaf because they are owned and dominated by the oligarchs, not because there was ever anything worthwhile about the RR work, the level of which is so amateurish as an example of econometrics work that it would boggle the mind of an observer if that observer didn’t know that the academic system at the big schools had been corrupted by the grants/think tank system funded by the oligarchs.

          I think, finally, that the RR study is an example of the corruption of social science in modern times. I believe that one can show that the study was not just guilty of calculation errors and errors of omission, but that these must be seen as part of a pattern of systematic bias that permeated their whole process of inquiry beginning with their selection of the problem, moving through every decision point in implementing the study, and ending with their evaluation of their evidence and their writing of the result. They made no attempt to do a scientific study maximizing fair comparison of alternative theories having policy relevance, but instead prepared what was essentially a legal brief supporting austerity policies and the Pete Peterson line. The social costs of what they did are strewn all over the globe. See this recent post at DailyKos.

      •  I do my daily walk at a local park (2+ / 0-)
        Recommended by:
        Clem Yeobright, ek hornbeck

        which has a flood control dam. The park was constructed as an FDR WPA project. So here it is 70 years later providing valley flood control and recreation (picnic areas, swimming beach, hiking trails, fishing). Now that was a good investment of public money and created jobs too.

        Obama Style Justice: Make 99% of Bush Tax Cuts Permanent. Then cut Senior's Social Security to pay for it. Hey Grandma, F#@K YOU!

        by CitizenOfEarth on Sat Apr 27, 2013 at 06:23:17 AM PDT

        [ Parent ]

    •  Just like agricultural overproduction? (1+ / 0-)
      Recommended by:
      gjohnsit

      Still, that 'seven fat years, seven lean years' thing worked out awfully well for the Egyptians, didn't it?

      My grandfather didn't buy a house until he had the money in the bank to pay cash for it. My other grandfather, however, made sure to include a hollow newel post in his new house for the day his 10-year mortgage was paid off. Which one do you think was the wiser?

      Too late for the simple life, too early for android love slaves - Savio

      by Clem Yeobright on Sat Apr 27, 2013 at 06:09:39 AM PDT

      [ Parent ]

      •  Bad example (1+ / 0-)
        Recommended by:
        ek hornbeck

        It refers to real wealth, not nominal financial resources. That's why you had to save for the 7 lean years.

        The nominal. financial resources of the US are unlimited because it is a fiat sovereign nation issuing its own currency it the amounts it chooses. So, it never has to save to get money. It can just make it. See here.

        I've told you this before, but you still make the point. Why? Do you believe the US Government is limited in its legal ability to create money? If so, why?

        •  I've never communicated with you before, dude (0+ / 0-)

          and I have zero interest in making your acquaintance now.

          My comment was addressed to gJohnsit, i.e., '[Reply to This]'.

          Why do you persist in insisting people persist in things they aren't actually persisting in?

          Too late for the simple life, too early for android love slaves - Savio

          by Clem Yeobright on Sat Apr 27, 2013 at 10:57:57 AM PDT

          [ Parent ]

          •  He is the diarist. (0+ / 0-)

            I have an intense interest in everything that occurs in mine.

            You?

            •  Responding to ... (0+ / 0-)
              I've told you this before, but you still make the point. Why?
              I've seen lots of people go nuts in defending their theses, but they can't expect to be enabled in their idiocy.

              Friends don't let friends go over the edge.

              Too late for the simple life, too early for android love slaves - Savio

              by Clem Yeobright on Sat Apr 27, 2013 at 12:06:16 PM PDT

              [ Parent ]

              •  I think he is talking about dK in general... (0+ / 0-)

                which has been at best marginally receptive.

                I remember when not so long ago people thought they could hide rate him into submission.

                So a little paranoia is justifiable.

                And it's a whole different world when you're managing the same piece across 4 or 5 sites, it's very easy to lose track.

                And you ignore his main point-

                Do you believe the US Government is limited in its legal ability to create money? If so, why?
                Do you?
              •  Tired of avoiding (0+ / 0-)

                the issue yet, Clem? Do you believe the US Government is limited in its legal ability to create money? If so, why?

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site